文档介绍：A Tutorial on the McKinsey Model for
Valuation panies
L. Peter Jennergren ∗
Fourth revision, August 26, 2002
SSE/EFI Working Paper Series in Business Administration No. 1998:1
Abstract
All steps of the McKinsey model are outlined. Essential steps are: calculation
of free cash flow, forecasting of future accounting data (profit and loss accounts and
balance sheets), and discounting of free cash flow. There is particular emphasis on
forecasting those balance sheet items which relate to Property, Plant, and Equip-
ment. There is an exemplifying valuation included (of pany called McKay),
as an illustration.
Key words: Valuation, free cash flow, discounting, accounting data
JEL classification: G31, M41, C60
∗Stockholm School of Economics, Box 6501, S - 11383 Stockholm, Sweden. The author is indebted to
Joakim Levin, Per Olsson, and Kenth Skogsvik for discussions ments.
1
1Introduction
This tutorial explains all the steps of the McKinsey valuation model, also referred to
as the discounted cash flow model and described in Tom Copeland, Tim Koller, and Jack
Murrin: Valuation: Measuring and Managing the Value panies (Wiley, New York;
1st ed. 1990, 2nd ed. 1994, 3rd ed. 2000). The purpose is to enable the reader to set up a
complete valuation model of his/her own, at least for pany with a simple structure
(e. g., pany that does not consist of several business units and is not involved in
extensive foreign operations). The discussion proceeds by means of an extended valuation
example. pany that is subject to the valuation exercise is the pany.
The McKay example in this tutorial is somewhat similar to the Preston example (con-
cerning a pany) in Copeland et al. 1990, Copeland et al. 1994. However,
certain simplifications have been made, for easier understanding of the model. In par-
ticular, the capital structure of McKay posed only of equity and debt (i. e., no
convertible bonds, etc.). The purpose of the McKay example is merely to prese