Printer Friendly
Dictionary, Encyclopedia and Thesaurus - The Free Dictionary
1,751,504,271 visitors served.
forum mailing list For webmasters
?
New: Language forums
Dictionary/
thesaurus
Medical
dictionary
Legal
dictionary
Financial
dictionary
Acronyms
 
Idioms
Encyclopedia
Wikipedia
encyclopedia
?

DCF

   Also found in: Dictionary/thesaurus, Acronyms, Wikipedia, Hutchinson 0.06 sec.
DCF

Discounted Cash Flows
Future, expected cash flows from a project or venture that have been adjusted to arrive at their present value. One uses the calculation of discounted cash flows to determine whether a particular investment is likely to be profitable.

Discounted Cash Flow (DCF)

What Does Discounted Cash Flow (DCF) Mean?

A valuation method used to estimate the attractiveness of an investment opportunity. DCF analysis uses future free cash flow projections and discounts them (most often by using the weighted average cost of capital method) to arrive at a present value, which is used to evaluate the investment's potential. If the value arrived at through DCF analysis is higher than the current cost of the investment, the opportunity may be a good one. It is calculated as follows:

Investopedia explains Discounted Cash Flow (DCF)

There are many variations in what can be used for cash flows and the discount rate in a DCF analysis. Despite the complexity of the calculations involved, the purpose of DCF analysis is simply to estimate the money one would receive from an investment, adjusting for the time value of money. DCF models are valuable tools, but they have shortcomings. DCF is merely a mechanical valuation tool, which makes it subject to the axiom “garbage in, garbage out.” Small changes in inputs can result in large changes in the value of a company. Instead of trying to project the cash flows to infinity, a terminal value approach often is used. A simple annuity is used to estimate the terminal value past 10 years, for example. This is done because it is harder to come to a realistic estimate of the cash flows as time goes on.

Related Terms:
Cash Flow
Cash Flow Statement
Free Cash FlowFCF
Internal Rate of ReturnIRR
Net Present ValueNPV



How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content.
?Page tools
Printer friendly
Cite / link
Email
Feedback
Add definition
? Mentioned in ? References in periodicals archive
 
Based on a third-party assessment using the DCF method, the total value was set at 2,250 million yen.
Meanwhile, KPMG FAS's calculation was conducted using DCF analysis, the market price method, the price multiple method, and the modified net asset method.
To determine a reasonable growth rate in net cash flow for purposes of a DCF model, and/or for purposes of a terminal growth rate to determine the capitalization rate, a CPA/ABV needs to assess the practice's capacity for treating additional patients and its ability to expand services.
 
Financial browser? ? Full browser
 
 
Financial Dictionary
?

Disclaimer | Privacy policy | Feedback | Copyright © 2009 Farlex, Inc.
All content on this website, including dictionary, thesaurus, literature, geography, and other reference data is for informational purposes only. This information should not be considered complete, up to date, and is not intended to be used in place of a visit, consultation, or advice of a legal, medical, or any other professional. Terms of Use.