From ccdc3572c802a29f54ceb85d020bb9ab8ffe040c Mon Sep 17 00:00:00 2001
From: Tyler Hoang <tyler@tylerhoang.xyz>
Date: Mon, 29 Jun 2026 01:37:18 -0700
Subject: test: add DCF and valuation backend tests

---
 backend/tests/test_dcf_advanced.py | 148 +++++++++++++++++++++++++++++++++++++
 1 file changed, 148 insertions(+)
 create mode 100644 backend/tests/test_dcf_advanced.py

(limited to 'backend/tests/test_dcf_advanced.py')

diff --git a/backend/tests/test_dcf_advanced.py b/backend/tests/test_dcf_advanced.py
new file mode 100644
index 0000000..20f6921
--- /dev/null
+++ b/backend/tests/test_dcf_advanced.py
@@ -0,0 +1,148 @@
+import pytest
+
+from app.services.data_service import _run_dcf_explicit_build
+
+
+_APPROX = pytest.approx
+
+
+def test_run_dcf_explicit_build_two_year_reference_scenario() -> None:
+    # Given
+    base_revenue = 1_000.0
+
+    # When
+    result = _run_dcf_explicit_build(
+        base_revenue=base_revenue,
+        revenue_growth=[0.10, 0.05],
+        ebitda_margin=[0.30, 0.32],
+        dna_pct_revenue=[0.05, 0.05],
+        capex_pct_revenue=[0.07, 0.07],
+        nwc_chg_pct_delta_rev=[0.02, 0.02],
+        tax_rate=[0.25, 0.25],
+        wacc=0.10,
+        terminal_growth=0.03,
+        shares_outstanding=100.0,
+        total_debt=50.0,
+        cash=10.0,
+        preferred_equity=5.0,
+        minority_interest=3.0,
+        projection_years=2,
+    )
+
+    # Then
+    assert result["available"] is True
+    assert result["base_fcf"] == _APPROX(184.25)
+    assert result["fcf_pv_sum"] == _APPROX(357.42928814344134)
+    assert result["terminal_value_pv"] == _APPROX(2_674.37743224556)
+    assert result["enterprise_value"] == _APPROX(3_031.8067203890014)
+    assert result["net_debt"] == 40.0
+    assert result["equity_value"] == _APPROX(2_983.8067203890014)
+    assert result["intrinsic_value_per_share"] == _APPROX(29.838067203890013)
+    assert result["wacc"] == 0.10
+    assert result["terminal_growth"] == 0.03
+    assert result["projection_years"] == 2
+
+
+def test_run_dcf_explicit_build_terminal_growth_at_wacc_returns_error() -> None:
+    # Given / When
+    result = _run_dcf_explicit_build(
+        base_revenue=1_000.0,
+        revenue_growth=[0.05],
+        ebitda_margin=[0.30],
+        dna_pct_revenue=[0.05],
+        capex_pct_revenue=[0.07],
+        nwc_chg_pct_delta_rev=[0.02],
+        tax_rate=[0.25],
+        wacc=0.10,
+        terminal_growth=0.10,
+        shares_outstanding=100.0,
+        total_debt=0.0,
+        cash=0.0,
+        preferred_equity=0.0,
+        minority_interest=0.0,
+        projection_years=1,
+    )
+
+    # Then
+    assert result["available"] is True
+    assert "Terminal growth" in result["error"]
+    assert "intrinsic_value_per_share" not in result
+
+
+def test_run_dcf_explicit_build_zero_wacc_returns_error() -> None:
+    # Given / When
+    result = _run_dcf_explicit_build(
+        base_revenue=1_000.0,
+        revenue_growth=[0.05],
+        ebitda_margin=[0.30],
+        dna_pct_revenue=[0.05],
+        capex_pct_revenue=[0.07],
+        nwc_chg_pct_delta_rev=[0.02],
+        tax_rate=[0.25],
+        wacc=0.0,
+        terminal_growth=0.03,
+        shares_outstanding=100.0,
+        total_debt=0.0,
+        cash=0.0,
+        preferred_equity=0.0,
+        minority_interest=0.0,
+        projection_years=1,
+    )
+
+    # Then
+    assert result["available"] is True
+    assert "WACC" in result["error"]
+    assert "intrinsic_value_per_share" not in result
+
+
+@pytest.mark.parametrize("shares_outstanding", [0.0, -1.0])
+def test_run_dcf_explicit_build_nonpositive_shares_return_error(shares_outstanding: float) -> None:
+    # Given / When
+    result = _run_dcf_explicit_build(
+        base_revenue=1_000.0,
+        revenue_growth=[0.05],
+        ebitda_margin=[0.30],
+        dna_pct_revenue=[0.05],
+        capex_pct_revenue=[0.07],
+        nwc_chg_pct_delta_rev=[0.02],
+        tax_rate=[0.25],
+        wacc=0.10,
+        terminal_growth=0.03,
+        shares_outstanding=shares_outstanding,
+        total_debt=0.0,
+        cash=0.0,
+        preferred_equity=0.0,
+        minority_interest=0.0,
+        projection_years=1,
+    )
+
+    # Then
+    assert result["available"] is True
+    assert "Shares outstanding" in result["error"]
+    assert "intrinsic_value_per_share" not in result
+
+
+def test_run_dcf_explicit_build_zero_base_revenue_returns_error() -> None:
+    # Given / When
+    result = _run_dcf_explicit_build(
+        base_revenue=0.0,
+        revenue_growth=[0.05],
+        ebitda_margin=[0.30],
+        dna_pct_revenue=[0.05],
+        capex_pct_revenue=[0.07],
+        nwc_chg_pct_delta_rev=[0.02],
+        tax_rate=[0.25],
+        wacc=0.10,
+        terminal_growth=0.03,
+        shares_outstanding=100.0,
+        total_debt=0.0,
+        cash=0.0,
+        preferred_equity=0.0,
+        minority_interest=0.0,
+        projection_years=1,
+    )
+
+    # Then
+    assert result["available"] is True
+    assert "Base revenue" in result["error"]
+    assert "intrinsic_value_per_share" not in result
-- 
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