Research Methodology
Research methodology
Connect the company, the evidence and the assumptions.
A useful model shows how its inputs lead to its outputs. Our methodology sets out the checks that matter when preparing, updating or using a DCF Analyst resource.
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Define the decision and coverage
Identify the company or business question, reporting period, currency, units and intended use. A DCF model and a qualitative strategy framework answer different questions.
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Establish the historical record
Compare historical figures and material company facts with relevant primary disclosures. Distinguish annual, interim, adjusted and restated figures; avoid combining incompatible periods or definitions.
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Make assumptions editable and identifiable
Growth, margins, reinvestment, discount rates and terminal assumptions are estimates. Treat their selection as a scenario choice, rather than a fact or a promised result.
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Check relationships and sensitivities
Review signs, units, formulas and material model relationships. Test how a change in a key driver affects the result, and investigate outputs that are inconsistent with the stated assumptions.
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Explain limitations
State the scope of the resource and the information that can change its interpretation. Company filings, market conditions and the user's circumstances can all change after publication.
Before relying on a result
Open the actual file, inspect its inputs and compare material data with the latest available sources. Resource coverage and features vary; a general methodology is not a guarantee that every legacy file includes the same schedules, source notes or review history.