what does a negative terminal value mean 
a negative terminal value would be estimated if the cost of future capital exceeded the assumed growth rate in practice however negative terminal valuations cannot exist for very long a company s equity value can only realistically fall to zero at a minimum and any remaining liabilities would be sorted out in a bankruptcy proceeding whenever an investor comes across a firm with negative net earnings relative to its cost of capital it s probably best to rely on other fundamental tools outside of terminal valuation the bottom lineterminal value is the estimated value of an asset at the end of its useful life it is used for computing depreciation and is also a crucial part of dcf analysis as it accounts for a significant portion of the total value of a business terminal value can be calculated using the perpetual growth method or the exit multiple method terminal value is a crucial part of dcf analysis as it accounts for a significant portion of the total value of a business it is important to carefully consider the assumptions made when calculating terminal value as they can significantly impact a business s overall valuation 