The Applied Research Of Discounted Free Cash Flow Model On The Enterprise Value

The business valuation is a concept associated with the generation of the equity market.With the establishment of the continuous development of the equity market as well as seekingto maximize the business value of enterprise management objectives, business valuationproblems have gradually been widespread concern in theory and practice. Development ofthe foreign theory in business valuation more mature, compared to that, research in relatedfields is still in initial exploration stage. In the business valuation practice, the internationalmainstream approach is the discounted cash flow method, the paper attempts to combine themethod with the reality of our country, to explore a appropriate valuation of he discountedcash flow method.This paper first points out the background of the research on the business evaluation, anda comprehensive review of the status of domestic and foreign business valuation studies,followed by a large number of the study of basic theories and methods of business valuation,detail discussed of the use of free cash flow valuation model to assess corporate value, for thepurpose of practice and lay a solid theoretical foundation. Finally, in the case of free cash flowin the form of discount model empirical research. This paper argues that both the discountedfree cash flow model taking into account the assessment of the sustainable development ofenterprises, but also taking into account the time value of money, through the valuationprocess can clear a direction in the enhance of the business valuation, so it is the bestmeasure of the value of the enterprise. This paper also analyzed discounted free cash flowmodel in our application environment. With the development of China’s capital market andfurther improve the accounting disclosure requirements, discounted free cash flow modelapplications have been initially and gradually improved, discounted free cash flow model hasbeen widely used in the value assessment.