Concepts of Business Valuation – Critical Review of the Discounted Cash Flow (Dcf) Analysis and Its Applicability in Today’s Business World

Concepts of business valuation – Critical review of the Discounted Cash Flow (DCF) analysis and its applicability in today’s business world
SEMINAR PAPER

Table of contents page 1. Introduction...............................................................................................................3 1.1 1.2 2. The importance of business valuation ..................................................................3 Key indicators covered in this seminar paper .......................................................4

The Discounted Cash Flow Analysis .......................................................................4 2.1 2.2 2.3 2.4 Foundational principles ........................................................................................4 Free cash flow as the key figure ..........................................................................5 Growth .................................................................................................................6 Return on invested capital (ROIC) .......................................................................8

3.

DCF methods applied ...............................................................................................9 3.1
..

WACC approach..................................................................................................9 The circularity problem...................................................................................................10 APV Adjusted Present Value Approach .............................................................11 Equity approach.................................................................................................12 The risk of making wrong assumptions ..............................................................13 Detailed planning period and terminal value .......................................................13 Determining the terminal value

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