The Improvement Of Discounted Cash Flow And Its Application In The Valuation Of Yisheng Pharmaceutical Coporation

The value assessment of enterprises is the important content of enterprise management,which is the common concern of managers,operators,investors and so the exploration about the methods of enterprise value assessment is the eternal topic among the theory and practice of community.At present,the current value evaluation system of enterprise including four methods—— the income method,market method,cost method,the option method.As a representative of the income approach,the free cash flow valuation method is widely used in the practice of enterprise value assessment,because of its mature theory basis and operability.But with the widely spread of the free cash flow valuation method,its disadvantages appear.Because of he uncertainty of the manege environment,the vary of the maket from minute to minute and the complexity of the business activities,so that more and more uncertain factors cannot be measured,and the relationship between the enterprise's management behavior and enterprise value is more and more complicated,so the traditional evaluation method of free cash flow is insufficient,which has not been able to meet the demands of the development of industry and economy.Therefore,improvement and application of free cash flow valuation method is very necessary.In recent years,with the rapid development of private hospital and the support of national policy,the uncertainty and complexity of the pharmaceutical industry faced had been growing.Obviously,the traditional free cash flow valuation method cannot accurately assess the value of pharmaceutical enterprises.Based on the careful analysis and summarizes several popular international value evaluation method,this text explored the usefulness and limitations of various methods.And this text selected the free cash flow valuation method,combined with the real options method to improve the traditional evaluation method,and taking the Yisheng pharmaceutical as the case.Through the concrete application of the improved free cash flow valuation method,so as to find out more effective methods,with a view to provide the reference for specific application of valuation methods in our company.This text adopted the research method of combining normative research and case studies.In the normative research,this text analysed the current enterprise value evaluation system with the basis of classic theory of domestic and foreign about the enterprise's value evaluation.Also,this text pointed out the limitations of the traditional methods of evaluation combining with the domestic actual situation,and put forward the improved method by using the classical model of the option method——two binomial tree model.The text applied the improved method to the practice of evaluation of Yisheng pharmaceutical enterprises and come to conclusion that free cash flow valuation method based on two binomial tree model was applicable to the pharmaceutical industry,thich promoted the improvement of the traditional evaluation method of free cash flow and provided examples of support to the development of theory and practice for enterprise value evaluation.This text altogether included five chapters.The first chapter illustrated the background and great significance of the research,and raised the questionof enterprise value assessment,and also explained the research findings based on the domestic and foreign literature.In addition,the first chapter made a general introduction the overall framework of this text.The second chapterwas the overview of the theory.This partexpounded the theory related to free cash flow valuation method,and made a general introduction about this method.The third part introduced the theory of the improvement of free cash flow evaluation method.On the basis of the above analysis,this part proposed the improved model which is based on the traditional model,combining the free cash flow valuation method with the real option.And also this part put forward the main innovation of this text.The fourth part was the application of the improved free cash flow valuation method.This part selected the Yisheng pharmaceutical as the case,and applicated the improved model of the third part to the case.The fifth part was theestimate of the result aboutthe case study.This part estimated the result of the valuation evaluation of Yisheng pharmaceutical by using the improved free cash flow method,and put forward some improvement advice about its application.