Tag Archive For "Capitalized Cash Flows"
Capitalized Cash Flow Valuation Method
The capitalized cash flow valuation method is a great way to value an established company which is expected to have a consistent growth rate going forward. Clearly this valuation technique isn’t well suited to the many startups with negative cash flows and hopes of exceptional growth in the future. However, it’s a good place to start …
Weighted Average Cost of Capital
The Weighted Average Cost of Capital (WACC) of a company represents the cost of acquiring additional capital based on the current capital structure. It is essentially the rate of return the business is expected to generate for it’s investors going forward. The WACC can therefore be used to discount future expected earnings in order to …
What is the Cost of Equity?
The cost of equity is the return an investor expects to earn by virtue of holding shares of a company. It is closely related to the risk profile of the company because an investor will expect high returns when holding a risky asset and low returns when holding a relatively safe asset. The capitalized asset …
Determine the Sustainable Growth Rate
The rate you expect discretionary cash flows to increase year over year is known as the growth rate. In particular, the growth in cash flows which is expected to continue forever is called the sustainable growth rate. In the context of valuing a startup we would generally have at least two phases of growth. A …
Discretionary Cash Flow – The Value Driver
Discretionary cash flow is an important metric used for valuing companies. It represents the cash generated after paying all costs required to maintain the company’s current cash flows. It is essentially the cash which management is free to spend as they see fit. Calculation: DCF = OCF – Cn DCF – Discretionary Cash Flow …
