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Glama

Valuation API

by io.github.johnbehar1500-ux

calculate_relever_beta

Read-onlyIdempotent

Relever an unlevered (asset) beta to a target capital structure using the Hamada formula — restoring financial risk for the specific debt/equity mix of the company or deal being valued. Formula: Beta(levered) = Beta(unlevered) x (1 + (1 - tax rate) x Debt/Equity). WHEN TO USE: Use AFTER unlevering comparable betas: apply the average unlevered beta to your target company’s (or transaction’s) capital structure to obtain the beta for WACC. WHEN NOT TO USE: Do NOT relever onto an unrealistic target structure — extreme leverage produces extreme betas that may overstate risk; sanity-check the resulting cost of equity. BEHAVIOUR: pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive; identical inputs always produce identical outputs. Division by zero, non-finite inputs, or mathematically undefined combinations return an explicit error instead of a number. RETURNS: JSON object { levered_beta: number (e.g. 1.15), inputs }. PARAMETERS: unlevered_beta (required): Unlevered (asset) beta, e.g. 0.85. Must be > 0. tax_rate (required): Corporate tax rate as a decimal between 0 and 1, e.g. 0.25 = 25%. debt_to_equity (required): Target debt-to-equity ratio (market values preferred), e.g. 0.6 = 0.6x. Must be >= 0.

Input Schema

TableJSON Schema
NameRequiredDescriptionDefault
tax_rateYesCorporate tax rate as a decimal between 0 and 1, e.g. 0.25 = 25%.
debt_to_equityYesTarget debt-to-equity ratio (market values preferred), e.g. 0.6 = 0.6x. Must be >= 0.
unlevered_betaYesUnlevered (asset) beta, e.g. 0.85. Must be > 0.

Schema Changelog

Changes observed during successful MCP inspections. Dates show when Glama detected each change.

  1. First observed

TDQS

A4.7/5.0
Behavior5/5

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

Annotations already provide readOnlyHint and idempotentHint, but the description adds valuable detail beyond that: 'pure deterministic calculation — no side effects, no network or storage access; idempotent and non-destructive' and explicitly documents error behavior for division by zero or non-finite inputs. This goes well beyond the annotations without contradicting them.

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

Conciseness5/5

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

The description uses clearly labeled sections (formula, when to use, when not to use, behavior, returns, parameters) and front-loads the core purpose and formula. Every sentence adds useful guidance; no filler or redundant restatement of the tool name.

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

Completeness5/5

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

For a deterministic calculation tool with 100% parameter schema coverage, readOnly/idempotent annotations, no output schema, and sibling tools covering related finance operations, the description is complete. It covers purpose, formula, usage timing, exclusion cases, return shape, error behavior, and parameter constraints.

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

Parameters3/5

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

Schema description coverage is 100%, so the schema already fully documents each parameter. The description's Parameters section largely mirrors the schema with examples, and adds only minor context such as 'market values preferred' for debt_to_equity. This is adequate but not a substantial increment over the structured schema.

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

Purpose5/5

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

States a specific verb ('Relever'), the resource (unlevered beta), the target state (target capital structure), and the exact formula (Hamada). It clearly differentiates from sibling calculate_unlever_beta, which performs the opposite operation.

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

Usage Guidelines5/5

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

Explicitly says WHEN TO USE: 'AFTER unlevering comparable betas... apply the average unlevered beta to your target company’s capital structure to obtain the beta for WACC.' It also gives a WHEN NOT TO USE caution about unrealistic leverage, and the WACC mention connects it to calculate_wacc without needing to inspect siblings.

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

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TDQS

A4.6/5.0
Disambiguation4/5

Most tools map cleanly to distinct valuation concepts (CAPM, WACC, DCF, multiples, NPV/IRR/MOIC, beta adjustment), so an agent can generally select correctly. The main ambiguity is that calculate_irr already includes MOIC and an IRR sensitivity table, making irr_sensitivity and calculate_moic partially overlapping in purpose despite their clarifications.

Naming Consistency4/5

The overwhelming pattern is calculate_<metric>, with clear snake_case and a consistent prefix throughout. The one outlier is irr_sensitivity, which drops the calculate_ prefix and breaks the established verb_noun convention.

Tool Count5/5

Twelve tools is a well-scoped size for a valuation calculation API, covering cost of capital, DCF, multiples, and return metrics without bloat. Each tool represents a meaningful standalone calculation an agent would need.

Completeness4/5

The core valuation workflow is well covered: cost of equity, WACC, DCF, enterprise value, multiples, and investment return metrics are all present. The notable gap is the reverse of calculate_enterprise_value—deriving equity value from enterprise value—and there is no standalone terminal value calculator, though both are workable gaps.

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