The Research On Unleveraged Free Cash Flow Model In Valuation Practice

With the rapid development of china’s capital market, the perspectiveof value investment has been accepted by more and more peole.In themeantime, with the researchers’ efforts, the theory of company valuationhas formed into an integrated system and been used in many fields such assecurity investment, company’s merger and acquisition and companygovernment.Among the valuation methods, unleveraged free cash flow model is avery important valuation tool due to its scientific characters. However, inpractice, this model is usually not properly used. Some valuators simplifythe model while others made mistakes when evaluating the parametors.Sofar there is little research which deals with how to use the model in adetailed way.This essay is divided into six parts. Part I discusses the backgroundand the significance of the essay, and points out the innovation points andthe drawbacks of the study. Then in the second part, relevant literature issummarised.After this, the essay then focuses on unleveraged free cashflow model theory, and comes up with a valuation practice framework ofUCFF.Part III and IV are the main parts of the essay. In these two parts,how UCFF model could be used when making parameters assumption andpredicting accounts is covered.In the last part, a summary and suggestionsare made.