Dcf Analysis

598 WordsDec 9, 20153 Pages
DCF analysis The value of a company today, based on how much money it’s going to make in the future Dividend discount model (DDM) Free cash flow to equity – determine the fair value of companies One must consider * Future sales growth, profit margins * Discount rate – depends on a risk-free interest rate 1. Forecast period & forecasting revenue growth * How far we should project cash flows * Excessive return period * One can guess based on the company’s competitive and market position Company competitive position * 1 year: * Slow-growing company * Operates in highly competitive, low margin industry * 5 years: * Solid company * Operates with advantage such a…show more content…
lating the fair value of equity We need to deduct its net debt from the value Net debt = short term debt + long term debt – cash & equivalents Fair value = enterprise value – net
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