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DCF

  • DCF means Discounted Cash Flow
  • DCF is closely related to Net Cash Flow
  • DCF focuses on long term value
  • DCF evaluates based on future cash flow

Further Reading


The economics of short-term performance obsession
www.tandfonline.com [PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …

Empirical Research of DCF model in Business Appraisal <span style=[J]' src='/thumbnails/?img=http%3A%2F%2Fen.cnki.com.cn%2FArticle_en%2FCJFDTotal-ZCPG200407004.htm' />Empirical Research of DCF model in Business Appraisal [J]
en.cnki.com.cn [[J]' href='https:/api.miniature.io/pdf?url=en.cnki.com.cn%2FArticle_en%2FCJFDTotal-ZCPG200407004.htm'>PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …

Probabilistic DCF analysis and capital budgeting and investment—a surveyProbabilistic DCF analysis and capital budgeting and investment—a survey
www.tandfonline.com [PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …

Free Cash Flow (FCF), Economic Value Added (EVA™), and Net Present Value (NPV):. A Reconciliation of Variations of Discounted-Cash-Flow (DCF) <a class="wpil_keyword_link" href="https://www.financereference.com/abnormal-earnings-valuation-model/"  title="Valuation" data-wpil-keyword-link="linked">Valuation</a>Free Cash Flow (FCF), Economic Value Added (EVA™), and Net Present Value (NPV):. A Reconciliation of Variations of Discounted-Cash-Flow (DCF) Valuation
www.tandfonline.com [PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …

Why DCF capital budgeting is bad for business and why business schools should stop teaching itWhy DCF capital budgeting is bad for business and why business schools should stop teaching it
www.tandfonline.com [PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …

The regulated firm and the DCF model: Some lessons from financial theoryThe regulated firm and the DCF model: Some lessons from financial theory
link.springer.com [PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …

DCF techniques and nonfinancial measures in capital budgeting: a contingency approach analysisDCF techniques and nonfinancial measures in capital budgeting: a contingency approach analysis
meridian.allenpress.com [PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …

The Fuzzy-DCF Model of Insurance Pricing and Its ApplicationThe Fuzzy-DCF Model of Insurance Pricing and Its Application
en.cnki.com.cn [PDF]
… The Economics of Short-Term Performance Obsession … Are stock prices likely to allocate financial resources efficiently when short-term earnings dominate investment decisions? Can investment managers who identify stocks as mispriced on a DCF basis earn excess returns …



Q&A About DCF


What is DCF analysis?

Discounted cash flow analysis is a method of valuing a security, project, company or asset using the concepts of the time value of money.

What are some assumptions made when using DCF?

The first assumption made when using DCF is that a dollar today is worth more than a dollar tomorrow; therefore, we must discount each future stream of income back to its present value before adding them together and dividing by our projection period length (usually 3-5 years).

What are some examples where DCF analysis can be used?

Examples include investment finance, real estate development and corporate financial management. It was also used in industry as early as 17s or 18s and became widely used in U.S. courts in 198s and 199s.

What does DCF stand for?

Discounted Cash Flow.

How do you calculate discounted cash flows?

First, we must forecast all expected free cash flows for each year in our projection period (usually 3-5 years). Then we discount these expected free cash streams back to their present values using an appropriate discount rate. Finally, add up all of these present values and divide by our total number of years in our projection period (3-5) which gives us our final answer - our estimated intrinsic value per share!

How does DCF analysis work?

Discounted cash flow analysis works by discounting all future cash flows by using cost of capital to give their present values (PVs). The sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value of the cash flows in question.

How do you determine an appropriate discount rate?

We can use either cost of capital or WACC as an appropriate discount rate

When was discounted cash flow analysis first introduced?

Discounted cash flow analysis was first introduced around 196s-198s but it wasn't until 198 that it started being widely used in U.S courts for patent valuation purposes.

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