The Application Of Free Cash Flow On Appraise The Enterprise Value

Although free cash flow has several years history as a financial proposition statement, it has not aroused enough interests in the financial theory utilization and the practice significance. This article embarks from the basic financial materials, considering the operational environment and the profession influence,then made a comprehensive research on the enterprise value appraisal model which based on free cash flow.This article first pointed out the background and the vital significance of the research on enterprise value appraisal. And comprehensively reviewed the present situation of domestic and foreign research on enterprise value appraisal. Then in the foundation of research on massive enterprise value appraisal theory and methods, pointed out the DCF method is the most rationale,scientifical and maturest method in appraises the enterprise value at present. And elaborately introduce the frame of discounted FCF model in appraises enterprise value. From this,it built the solid foundation of carry on this model into practice. Then this article applied the equal form of the discounted FCF model under the steady state - - multiple FCF model to appraise the Shanghai Stock Market's 372 steady company's enterprise value, and used correlation analysis and gray-related-degree method to confirm that the appraising value has the high incidence relation with the sample enterprise's market value. After this,the article has conducted the practical research by the case research with discounted FCF model. Mainly used the automobile enterprise - - Chongqing Changan Auto Co. Ltd 's auditing financial reports of previous years as the foundation to conduct the research. Not only gave the estimate value, but also gave the proposal of how to enhance the enterprise value of Changan Auto Co. Ltd. Afterwards ,it pointed out some questions which need to pay attention when we applie the discounted FCF model. And conducted the research on how to find the enterprise value creation from the discounted FCF model. So it is significance in both theory and practical in enhance the enterprise value.Finally,the conclusion part summarized the achievement of each parts, simultaneously pointed out some insufficients in the research technique and also give some outlook of the future research.