Discounted Cash Flow (DCF) – Assumptions
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions & Analysis Study Guide.pdf
● Discounted Cash Flow
(DCF) – Assumptions &
Analysis Study Guide
Discounted Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_
Cash Flow (DCF) – Assumptions
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions & Analysis Study Guide.pdf
,Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
Why do you build a DCF analysis to In theory, a company is worth the Present Value
value a company? of its expected future cash flows: Company Value
= Cash Flow / (Discount Rate - Cash Flow Growth
Rate), where Cash Flow Growth Rate < Discount
Rate But you can't just use this single formula
because a company's Cash Flow Growth Rate and
Discount Rate change over time. So, in a
Discounted Cash Flow analysis, you divide the
valuation into two periods: One where those
assumptions may change (the explicit forecast
period) and one where they stay the same (the
Terminal Period). You then project the company's
cash flows in both periods and discount them to
their Present Values based on the appropriate
Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
,Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
Discount Rate(s). You compare this sum - the
company's Implied Value - to its Current Value or
"Asking Price" to see if it's valued appropriately.
Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
, Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
Walk me through a DCF analysis. A DCF values a company based on the Present
Value of its Cash Flows in the explicit forecast
period plus the Present Value of its Terminal
Value.
1. You start by projecting the company's Free
Cash Flows over the next 5 - 10 years by making
assumptions for the revenue growth, margins,
Working Capital, and CapEx.
2. Then, you discount the cash flows using the
Discount Rate, usually the Weighted Average
Cost of Capital, and sum up everything.
3. Next, you estimate the Terminal Value using the
Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions & Analysis Study Guide.pdf
● Discounted Cash Flow
(DCF) – Assumptions &
Analysis Study Guide
Discounted Guidehttps://www.stuvia.com/dashboard!@_)#*)(@$)($@*($@)($@*_
Cash Flow (DCF) – Assumptions
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions
Discounted
& Analysis
Cash Flow
Study(DCF)
Guide.pdf
– Assumptions & Analysis Study Guide.pdf
,Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
Why do you build a DCF analysis to In theory, a company is worth the Present Value
value a company? of its expected future cash flows: Company Value
= Cash Flow / (Discount Rate - Cash Flow Growth
Rate), where Cash Flow Growth Rate < Discount
Rate But you can't just use this single formula
because a company's Cash Flow Growth Rate and
Discount Rate change over time. So, in a
Discounted Cash Flow analysis, you divide the
valuation into two periods: One where those
assumptions may change (the explicit forecast
period) and one where they stay the same (the
Terminal Period). You then project the company's
cash flows in both periods and discount them to
their Present Values based on the appropriate
Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
,Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
Discount Rate(s). You compare this sum - the
company's Implied Value - to its Current Value or
"Asking Price" to see if it's valued appropriately.
Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
, Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
Walk me through a DCF analysis. A DCF values a company based on the Present
Value of its Cash Flows in the explicit forecast
period plus the Present Value of its Terminal
Value.
1. You start by projecting the company's Free
Cash Flows over the next 5 - 10 years by making
assumptions for the revenue growth, margins,
Working Capital, and CapEx.
2. Then, you discount the cash flows using the
Discount Rate, usually the Weighted Average
Cost of Capital, and sum up everything.
3. Next, you estimate the Terminal Value using the
Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf Discounted cash flow- Assumptions and Analysis.pdf
