Lesson 2 of 6
Inputs that come from filings
Every input in the model set against the statement, fiscal year and accession number it came from, and the three that cannot come from a filing at all.
By Javier Sanz
Founder of ValueScreener. Built Ninety Nine, a securities services provider, and sold it to a tier-one global bank; ran operations and internationalization at Alpaca, the brokerage API.
Who writes thisEditorial processLinkedIn (opens in a new tab)X (opens in a new tab)
In one minute
- Every input divides into three kinds: read from a filing, read from a published series, or chosen by you.
- The third kind is where the answer actually comes from, which is why it is listed separately and never blended with the first.
- Writing the accession number beside each filed input is what makes the model checkable in two years.
This is the lesson that takes the time, and it is the one that makes everything after it checkable. Nothing is computed here. Everything is located.
The three kinds of input, and how many of each
- 1Read from a filingFree cash flow by year, share count. Each with its statement, fiscal year and accession number
- 2Read from a published seriesThe risk-free rate, dated. Published by its issuer and stored here with the date it was read
- 3Chosen by youRequired return, growth in the explicit years, terminal growth. Three numbers, and the answer lives in them
Kind one: read from a filing
Free cash flow, taken as operating cash flow less capital expenditure, for nine fiscal years. The unweighted mean is 883.3 million dollars, and the applied cyclical course produced it.
The diluted share count, 99,779 thousand for the fiscal year ended 31 October 2025, from the income statement in that year's annual report.
Both come with their accession numbers, listed in the sources below. That is not ceremony: a company can restate a prior year, so a figure labelled only by fiscal year does not say which version of it you have, while one carrying an accession number does.
Kind two: read from a published series
One input in this model. A risk-free rate, which is not in any company's filing and has to come from a published series with a date attached.
The product ingests the US Treasury 10-year par yield nightly. The most recent stored reading at the time of writing is 5.00 percent, dated 15 September 2026. Across the stored history, which runs from 17 December 2025, the readings range from 3.97 to 5.00 percent with a mean of 4.408 percent.
A rate without a date is not a rate, and a model that quotes one without saying when it was read cannot be rebuilt.
Kind three: chosen by you
Three numbers, and they are where the answer comes from.
The required return, for which this model uses 10 percent. That is a choice, not a computation, and a reader who builds it from a risk-free rate plus a premium is choosing the premium.
The growth rate in the explicit years, here 2 percent for five years. Revenue at this filer compounded at 8.25 percent a year across the nine-year window, so 2 percent is well below the record and is a choice to be conservative rather than a projection of anything.
And the terminal growth rate, here 2 percent.
What is deliberately not here
No vendor value estimate, no analyst consensus figure and no forward earnings multiple. All three were retired from this product on 2026-09-11, and a model that reached for one would be resting on a number nobody can replay.
No price, either. A price enters only in the fifth lesson, where the margin is computed, and it is the reader's own input there too.
Check yourself
Why write the accession number beside a filed input?
- Because the regulator requires it
- Because a company can restate a prior year, so a figure labelled only by fiscal year does not say which version it is
- To show the model is thorough
Show the answer
Answer: B.
An accession number identifies one filing. A model whose inputs carry them can be rebuilt by a stranger in two years.How many of the six inputs are choices rather than readings?
- One
- Three: the required return, the growth in the explicit years and the terminal growth
- None, since all are derived from filings
Show the answer
Answer: B.
Two inputs are filed and one is a published dated series. The three choices are where the answer comes from, which is why they are listed separately.Why must the risk-free rate carry a date?
- Because it is revised by its publisher
- Because a rate without a date cannot be rebuilt, and the stored series ranges from 3.97 to 5.00 percent across its history
- Because it changes the share count
Show the answer
Answer: B.
A model quoting an undated rate cannot be checked by anybody, including its author a year later.Sources
- Toll Brothers, Inc., annual reports on Form 10-K for fiscal years 2017 through 2025, for operating cash flow, capital expenditure, revenue and diluted share count: accessions 0000794170-17-000065, 0000794170-18-000055, 0000794170-19-000067, 0000794170-20-000066, 0000794170-21-000079, 0000794170-22-000049, 0000794170-23-000066, 0000794170-24-000051 and 0000794170-25-000112.
- US Treasury 10-year par yield as stored by the product, daily readings from 17 December 2025 to 15 September 2026, read 16 September 2026.
What this leaves out
- The required return of 10 percent, the explicit growth of 2 percent and the terminal growth of 2 percent are choices made to build one worked model. They are not recommendations and no reasoning in this course derives them.
- The stored risk-free series begins on 17 December 2025, so nothing about earlier periods can be read from it and its range describes that window only.
- Free cash flow as operating cash flow less capital expenditure is one definition among several. It is stated here so the model can be rebuilt, not because it is the only correct one.
- Nothing here is a view on Toll Brothers or on any security.