Enterprise’s Value Assessment Based On Equity Free Cash Flow Discount Model

With the rapid development of our country’s socialist market economy and the perfectionof capital market, Enterprise’s value assessment has become increasingly important and beenurgent needed. Compared with other methods of assessment, free cash flow discount methodcan estimate more effective of long-term development potential that based on value creationability, and that is why the application in the western developed countries is so wide. Themain content of the dissertation is as follow:The first part is introduction, explains research background, the purpose, the significanceand methods; the second part is the literature review, this part reviews the theories ofenterprise’s value assessment, especially introduces the equity free cash flow discount model;the third part is the background analysis of the Qingdao Haier company, from three anglesincludes macroscopic, industry and company; the fourth part is the assessment process of thevaluation of Qingdao Haier company, the results affirmed the free cash flow discount model;the last part, is the conclusion of the proposed method and explaining why theirs existsdifference between the intrinsic value and market value.In this paper, we choses the two-stage equity free cash flow model. After acomprehensive analysis of the operating environment of Qingdao Haier, the country’s overalleconomic growth trends, combined with Qingdao Haier’s2007to2012financial data,concluded the forecast period is four years, in2013the revenue growth is14%in, followedyears the revenue growth rate is declined2%every year, in2017the company entered thesustainable growth, sustainable growth rate is6%. Risk-free rate is referenced to the August2012issue of the10-year Treasury rate3.39%, calculated by linear regression method derivedbeta of1.13. Came to the conclusion in2012the Qingdao Haier’s assessed value is105.994billion Yuan, the average price of28.50Yuan per share.In this paper, compared the results of equity free cash flow model with the trend of theQingdao Haier stock price after2013, and got the conclusion that the discounted free cashflow model’s operability in China’s A-share listed companies.