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What it does

Runs Damodaran’s 6-step diagnostic checklist on the completed valuation. Flags inconsistencies so you can catch errors before acting on the result.

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The 6 checks

  1. Revenue growth vs. market size — Is the projected revenue plausible given the total addressable market?
  2. Margin convergence — Does the target margin make sense for the industry? Is the convergence path reasonable?
  3. Reinvestment consistency — Is the sales-to-capital ratio consistent with the growth assumption? Higher growth requires more reinvestment.
  4. Risk and cost of capital — Does the WACC reflect the company’s actual risk profile? Is it converging to a reasonable stable-state WACC?
  5. Terminal value proportion — What fraction of total value comes from the terminal value? Above 85% is a warning sign.
  6. Price vs. value — How does the intrinsic value compare to the current market price? Large gaps warrant a second look at assumptions.