Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

The description explicitly discloses that the tool is a 'pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive,' which aligns with and expands on the annotations. It also reveals important behavioral constraints: terminal value is only defined when wacc is strictly greater than terminal_growth_rate, debt and cash are not netted, and results are rounded to 2dp. This goes well beyond the annotations and helps an agent set correct expectations.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Is the description appropriately sized, front-loaded, and free of redundancy?

The description is organized with clear labeled sections: purpose, when to use, when not to use, behaviour, returns, and parameters. It is detailed but every sentence adds value, and the most important scoping information is front-loaded in the first sentence.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

There is no output schema, so the description correctly explains the return shape: a JSON object with inputs and results including present_value, terminal_value, and enterprise_value. It also covers the critical model constraints, rounding behavior, and the distinction between enterprise and equity value, making the tool safe to invoke without further information.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

Schema description coverage is 100%, and every parameter already has a thorough schema description including decimal format, constraints, and the discounting convention. The description's PARAMETERS section largely restates this information rather than adding new meaning, so the high-coverage baseline of 3 applies.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Does the description clearly state what the tool does and how it differs from similar tools?

The description opens with a specific verb and resource: 'Compute a Discounted Cash Flow (DCF) valuation: enterprise value from projected free cash flows plus a Gordon-growth terminal value.' This precisely identifies what the tool does and clearly separates it from valuation siblings. It also explicitly names alternatives in the WHEN NOT TO USE section, so an agent can disambiguate it from calculate_irr and calculate_wacc.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Does the description explain when to use this tool, when not to, or what alternatives exist?

The description contains a dedicated WHEN TO USE section that states the intended scenario: valuing a company or asset from projected free cash flows, WACC, and perpetual terminal growth rate. It also provides explicit WHEN NOT TO USE guidance, naming calculate_irr for single-exit lump-sum investments and calculate_wacc when the discount rate itself is needed.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.