Research On Value Evaluation Of Y Company Based On DCF Model

With the continuous development of market economy,the goal of modern enterprise management has been transformed from profit maximization to enterprise value maximization.In today's increasingly competitive market environment,the enterprise in order to seek its own survival and development,provide the basis for future business decisions,must realize the importance of accurately assess and improve enterprise value.Therefore,the evaluation of corporate value has become a topic widely concerned by scholars and experts.Although stock prices can regarded as the standard of the value of the listed companies,the price will still be affected by many factors,such as negative news,industry standards,national policies and the macroeconomic environment.The same is true for the dairy industry.so in order to accurately assess the real value of the enterprise,scientific evaluation method must be adopted.This paper takes Y dairy company as the research object and evaluates its enterprise value by using free cash flow method.In this paper,the relevant theories of enterprise value assessment are firstly reviewed.And the article compares the method of value assessment,including the cost method,income approach and market approach,and analyzes its applicability.Then,based on the specific situation of Y company and the characteristics of the dairy industry,the free cash flow model is selected to evaluate the value of Y company.After that,the operating conditions of Company Y are analyzed from the aspects of industry development,corporate strategy and financial performance.Based on this,the financial situations are forecasted by way of percentage of sales method according to the historical operating performance.For the accuracy of the assessment,the trend extrapolation method is applied to predict the business revenue,and then to calculate the future free cash flow of enterprise.Finally,the discount is made to calculate the value of Company Y with the determined weighted average capital cost(WACC).Compared with the stock price of Company Y,the results of value assessment are presented as well as being analyzed briefly.The study found that the value of Company Y,which is assessed by the free cash flow method,can reflect the value creation ability of enterprises much more objectively and accurately,this can provide a basis for business economic decision-making.Based on free cash flow model,this paper evaluates the value of Y company.The result of value assessment is of great significance for managers to understand the true economic value of the enterprise,and provide a useful reference for the enterprise value assessment of the dairy industry.