Understanding Discounted Cash Flow Valuation Methodology
Learn about the Discounted Cash Flow approach for business valuation, including key factors influencing value, valuation process, and future forecasting considerations in this comprehensive guide.
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Presentation Transcript
Valuation One Method: Discounted Cash Flow approach
What drives value? Revenue Growth Gross Margin Operating Margin Tax Rate Investments in Capital (Fixed and Working Capital)
Valuation via Discounted Cash Flows (DCF) The Value of the company is the present value of all of the Future net Free Cash Flow (FCF) At an appropriate discount rate (a dollar 3 years from now is not worth a dollar today). Value to the owners is Present Value of Future FCF less outstanding loans.
