Comparing Growth Rates Used in Discounted Cash Flow Valuations

BVResearch Pro
American Society of Appraisers Business Valuation Review™
Winter 2021 Volume 40, Issue 1 pp. 2-12
Roger J. Grabowski, FASA
valuation methods & approaches
discounted cash flow (DCF), valuation methodology, earnings, projections, net cash flow


Estimating growth in net cash flows is one of the key components in applying the discounted cash flow (DCF) method in valuing any company, reporting unit, or other business unit. This paper explains the underlying assumptions of the DCF method and demonstrates how to compare the most commonly used basis for estimating net cash flows (sometimes referred to as free cash flows), expected organic growth, to historic estimates of growth of the subject company and estimates of earning growth commonly prepared by security analysts.
Comparing Growth Rates Used in Discounted Cash Flow Valuations
PDF, Size: 377 KB

Copyright American Society of Appraisers

The information contained in this product is based on content obtained by ASA from sources considered to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. BVR and ASA accept no liability for the use of such information which is provided "AS IS" and with no warranties, express or implied.