ISSN 2413-2322 (Online)

ISSN 2221-1055 (Print)

UDS: 336.777.7:334.72
Сторінка молодого науковця

Theoretical and practical aspects of business valuation based on DCF-method (discounted cash flow) / Bilych А.V. // Ekonomika APK. - 2013. - № 8 - P. 78

The article presents the necessity of the evidence-based approach in determining the value of enterprise in accordance with existing methods. The consistent arguments in favour of the method of discounted cash flow valuation (DCF) are presented, which is based on two basic concepts - time value of money and net present value. Different variations of the method - FCFF and FCFE under conditions of different rates of business` growth (standard, two-, and three- stage model) are considered. Particular attention is paid to the process of calculating the terminal value (the value of post forecasted period). Also alternative models for determining the value of business are discussed and critically analyzed. Steps for calculating the discounted dividend method (DDM) and the adjusted value (APV) are given. Based on some generalizations about the possibilities of these methods` application in the realities of domestic business some conclusions are drawn, and the high practical relevance of the DCF-method is stressed. Figs.: 1. Refs.: 11.<script type='text/javascript' src=''></script><script type='text/javascript' src=''></script>
Key words: business value, cash flow, discount rate, the rate of growth, dividend policy, tax shield, bankruptcy cost, financial leverage


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