The Application Of Free Cash Flow Approach In Business Valuation

Nowadays, the research on valuation of modern enterprises is of momentous current and theoretical significance in the process of deepening enterprise reform in china. Enterprise valuation is not only a necessary toll for outside investors to analyze investment, but also a means for managers inside enterprises to use. Free cash flow is created from enterprises operation activities, which perfectlydescribes the long term development ability on measuring effect of investment and operation.This thesis is mainly about the application of free cash flow approach in business valuation. Although there are many thorough theories, complete case analysis is deficient. This article makes empirical research on this method by using a complete case---Sanquan Food Ltd based on the existing theory.The main content of the dissertation is as followPart1. Discuss the reason for application of discounted free cash flow approach and significance of enterprise valuation look back on the current situation from home and abroad, and then present the purpose, main content and study methodPart2. Summary of business valuation method. Introduce several valuation approaches mainly applied in practice, present the application value of discounted free cash flow method by analyzing current situation of valuation theory, which provide necessary theory basis and analysis premisesPart3. Theoretical research on application of discounted free cash flow approach. Discuss in detail about the frame and lay a solid foundation for empirical studyPart4. Empirical research on application of discounted free cash flow approach. This article makes empirical research on this method by using a typical case—Sanquan Food Ltd based on the existing theory, and verifies the valuation result based on the market value after the Initial public offering in 2008Part5. Conclusion. Ensure the manipulability of discounted free cash flow approach, summarize the deficiency lies in the process of application and propose method for improvement...