Enterprise Value Evaluation Based On Improved Free Cash Flow Model

After reforming and opening, China began the transition from a planned economy to a socialist market economy, and the public ownership to the mixed ownership. In order to adapt to the diversified ownership and the economic diversification, the asset appraisal industry in China based on the foreign theory has developed gradually In recent years, under the influence of economic globalization, China’s enterprises have more and more economic activities between them. Such as mergers, restructuring, financing transactions and so on. The enterprise value assessment as the theoretical basis of economic activities has attracted more and more people’s attention. The enterprise value assessment not only can be used as a predictive tool, and help decision makers enhance the enterprise value, but also play a role in ensuring the state-owned asset security.This thesis puts forward FCFF model:dynamic and N value determination based on the theory of the enterprise value assessment, using the time series model theory and the life cycle theory to improve the FCFF model. This thesis tries to establish a reasonable FCFF model, use the time series model to solve the dynamic problem of free cash flow, and determine the N value based on the life cycle theory. In order to verify the rationality of the time series model and the life cycle theory, this thesis chooses China Nanche Group Co. Ltd as a case., evaluates the enterprise value by the improved free cash flow model, and forecasts the future free cash flows with the softwares, such as EVIEWS, SPSS, and EXCELThrough the CSR evaluation results, we get the following conclusions:the difference sequence of free cash flow is the time series; the enterprise is in the growth of the life cycle. The enterprise will be stable in22years.