> ## 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.

# Diagnostics

> Run Damodaran's 6-step diagnostic checklist to sanity-check the valuation output.

## 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.

## 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.