View All num of num Add Photos Jefferies & Company www.jefferies.com Unclaimed Profile Overview Reviews Salaries Interviews Jobs Photos Benefits 135 Reviews 378 Salaries 76 Interviews Follow Add Interview Follow Add Interview Interview Question Investment Banking Analyst Interview San Francisco, CA Jefferies & Company What if FCF's are negative in your terminal year? Tags: See more , See less 8 Answer Add Tags Answer Interview Answer 2 Answers ▲ 1 ▼ Firm is probably not stable yet - DCF assumes a stable company so if FCF's are negative, DCF is probably not best approach. Interview Candidate on Oct 3, 2011 ▲ 1 ▼ You would probably want to wait and extend your planning period until your free cash flow levels out - a terminal value multiple is no good if it is not based on a stable or somewhat stable cash flow. Remember that applying a terminal value multiple, or even a growth rate to your FCF is best at these scenarios:1. Your company comes out of a business cycle2. Your company realizes whatever investments they've undertaken3. Your earnings stabilize (either from a peak or trough) Anonymous on Oct 6, 2011 Interviews > Investment Banking Analyst > Jefferies & Company Add Answers or Comments To comment on this, Sign In or Sign Up.