First of all, in case of a negative valuation, please check that the Questionnaire and the Financials tabs are complete.
The valuation can result negative because the projected positive cash flows do not compensate for the negative ones. This is not a technical error of the platform, it is a financial matter connected to the forecasted performance of your business.
There are 3 things you should check in order to solve the issue – all connected with the Free Cash Flows to Equity result:
- Double check revenues and costs projections and how conservative/reasonable they are. Are revenues too low or costs too high, especially in the last projected year?
- Add more projected years: it may be that for your business it's normal to have a considerable amount of negative cash flows in the initial years (due to the industry or business activity). In this case, you should to add more projected years, to more accurately take into account the positive cash flows you will generate
- Make sure the industry you selected is suitable for your business. Some industries have, by structure, a "heavy" default working capital (inventory, payables, receivables) – which can significantly absorb the free cash flows to equity. Please be sure that is also your case, by either checking the industry (Q19 of the Questionnaire tab) or adjusting the default working capital.
As always, for any question on this issue, please don't hesitate to contact us! We will be happy to look into this.