Definition
Discounted Cash Flow (DCF) is a valuation method used to estimate the present value of future cash flows, adjusted for time value of money. DCF=?(CFt/(1+r)xt), where: CFt = cash flow at time r = discount rate t = time period
Related Services
Investment analysis, business valuation, and financial modeling services use DCF to assess company value.
Problem and Application
DCF depends on accurate cash flow projections and discount rates. Incorrect assumptions can lead to misvaluation.
Conclusion
DCF is a fundamental valuation tool. Businesses must use realistic inputs and sensitivity analysis to ensure reliable results.
