Using The Free Cash Flow Model To The XY Company Value Evaluation

XY Company is a production and sales of auto glass and float glass company, the shareholders of a company to transfer the 7.5% stake, avoiding the phenomenon of there was a overvalued or undervalued equity stake sale to shareholders to provide an objective of the equity transfer price. This article USES the free cash flow model to evaluate the value of XY company. First, combining with the characteristics of XY company with the free cash flow method than other valuation analysis model has the advantages of XY company chose to use free cash flow method to assess the value of the cause and the applicability. Secondly, combining with the characteristics of the company with the free cash flow model using the steps to company operating condition for analysis to understand the external environment and internal environment combined with financial ratios to predict corporate cash flow. Again, using the operating cost of capital(BAPM) model to predict the XY company cost of capital is 9.61%, according to the above index to estimate the value of the company for 4487404246.60 yuan, at the same time to evaluate the value of equity results in single factor sensitivity analysis and multi-factor sensitivity analysis assess the XY company equity value in the range of possible variations- 1339870679 yuan to 15185201024 yuan between, eliminate the financial liabilities of the value of the company have XY company equity value is 545454614.7 yuan, free cash flow model for XY company valuations, necessary to compare both the valuation results p/e valuation may overestimate the value of the company, finally get the XY company 7.5% stake in the transfer price of 40,909,096.1 yuan.Assessment in the process of using free cash flow method, the company in the past, present, and future business and profitability has made the summary and evaluation at the same time reveals the key factors influencing the XY company value for managers to provide decision-making basis for company strategic planning, in order to improve the company’s business for your reference. Another free cash flow method which involves many parameters in the course of using, in the presence of different enterprises for parameter calculation methods are different, can give the similar enterprises in the use of the method when evaluating the value for your reference.