The larger the estimate of working capital as a percentage of revenues, the larger the investment in net working capital, and the lower the FCFE in the stable period. A low stable-period FCFE estimate will result in a low estimate of value today. The solution is to use a working capital ratio closer to the long-run industry average.

If the cost of equity estimate in the stable growth period is too high, the terminal value will be too low. Because the terminal value typically makes up a large portion of the current value, this will cause the current value estimate to be too low. The solution is to use a cost of equity estimate based on a beta of one.

If earnings are temporarily depressed, all the FCFE estimates will be low, and the current value estimate will be low. The solution is to use an estimate of long-run normalized earnings.