DCF Model – Discounted Cash Flow Analysis

In this article we provide a basic DCF Model. By conducting a discounted cash flow analysis (DCF), an investor can determine how much an investment is worth. A DCF evaluates a specific project, value shares of a publicly traded company, or invest in a privately owned enterprise.

A DCF is an intrinsic method of valuation. The analysis works by looking at the value of projected future cash flows and then discounting them back to present day. Therefore, the model considers the time value of money.

The DCF model below helps an investor to value a company and arrive at a reasonable share price.

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dcf model
Source: Corporate Finance Institute

Cover Image by ClydeBank Media

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