> ## Documentation Index
> Fetch the complete documentation index at: https://valuation-101.com/docs/llms.txt
> Use this file to discover all available pages before exploring further.

# Equity Bridge

> Convert operating value of the firm to equity value per share.

## Equity bridge in `lib/dcf_engine.py`

The equity bridge is the final step of the valuation, implemented within the DCF engine module. It converts the discounted operating value of the firm into a per-share equity value.

## The bridge

```
Operating value of the firm (PV of FCFFs + PV of terminal value)
− Book value of debt
+ Cash and marketable securities
− Minority interests
− Employee options value (from option_value.py)
× (1 − failure probability) (from failure_rate.py)
÷ Shares outstanding
= Estimated value per share
```

## Key function

### `equity_bridge()`

**Parameters:**

* `operating_value` — present value of the firm (from discounting)
* `debt` — book value of debt
* `cash` — cash and marketable securities
* `minority_interests` — minority interest claims (if any)
* `option_value` — total employee option value (from [option\_value.py](/docs/lib/option-value))
* `failure_probability` — probability of corporate failure (from [failure\_rate.py](/docs/lib/failure-rate))
* `distress_proceeds` — recovery value in failure scenario
* `shares` — shares outstanding

**Returns:** Dictionary with equity value, value per share, and each bridge component.

## Related modules

* [option\_value.py](/docs/lib/option-value) — dilution-adjusted Black-Scholes for the option deduction
* [failure\_rate.py](/docs/lib/failure-rate) — probability of failure for the distress adjustment