The Research Of Free Cash Flow Applied In The Brewing Industry For Listed Companies

Capital operation has become increasingly popular in our business world, because theenterprise management has made stride forward from real management to valuemanagement. A new goal for the production and operation of enterprises has also changedfrom the pursuit of profit into value increment. In recent years, with the continuous growthof consumption and demand of alcohol products in domestic and international market,brewing industry developed energetically. From the view point of stock price, Wuliangye,Zhangyu A and Guizhou Maotai went up7times in8years,10times in7years and11times in5years respectively. It is clear that brewing industry plays a crucial role in thewhole national economy, and its enterprise value attracts more and more attention ofstakeholders. How to evaluate the intrinsic value of listed companies in brewing industryscientifically and rationally, impelling listed companies to develop better and improving thelevel of valuation of listed companies in brewing industry have become important contentsof the research and application for enterprise managers, investors, creditors, financiers.Through reviewing related domestic and foreign literature about business valuation,there are lots of theory and methods for business valuation, and the discounted free cashflow method is widely used for enterprise value assessment. The advantages of this methodhave better practical value in the enterprise value assessment. At present, there are fewresearch literature about business valuation in brewing industry applied the discounted cashflow model. Based on the domestic and foreign application experiences, combined withChina’s capital market environment, the advantages and disadvantages of variousassessment methods and the actual situation of brewing industry were compared andanalyzed, and finally concluded that it is maneuverable and effective for assessing theintrinsic value of listed companies with the free cash flow discount model in Chinesebrewing industry.Aimed at the analysis of the applicability for the discounted free cash flow discountmodel in brewing industry in our country, application research were carried on by using ofrelevant financial data from23listed companies from our country in brewing industry.From the analysis of financial data in recent five years of those companies, the result showsthat: assessed value and market value are highly relevant in the listed companies in brewing industry. A practical valuation method was put forward in brewing industry valueassessment, and it became more scientific and effective for the application of free cash flowdiscount model in business valuation and promoted the development of enterprise valueassessment in our country.