Research On The Performance Evaluation Of Gree Electric Appliances Enterprise Value Based On Free Cash Flow Model

The essence of the enterprise is to create value.The enterprise value assessment is an important premise and basis for determining the final transaction price in investment and M&A transactions.In the process of enterprise value assessment,scholars and securities analysts will look more at free cash flow.Make it an important indicator of corporate value.Free cash flow is the portion of the cash flow remaining after the cash flow generated by the business activities eliminates the necessary operating capital and its long-term working capital.The free cash flow model is based on free cash flow to assess corporate value.Gree is in the mature electrical industry,development is stable,market share is high,and can obtain continuous and stable cash flow.It is suitable for the free cash flow model for enterprise value evaluation.Through SWOT and financial analysis,the company fully understands the development status,core competitiveness and financial level of the company,and compares various value evaluation methods.The application of the free cash flow model in Gree was analyzed.The company’s various financial indicators are stable and have a positive cash flow,and its future development in the industry is also considerable,which can make a reasonable prediction of Gree’s future cash flow.This paper uses a two-stage model to evaluate the value of the enterprise.Through data analysis,model building,parameter screening,forecasting and other processes,the company determines the f’ree cash flow and the discount rate of the enterprise,so that the enterprise value can be reasonably estimated.This paper compares the enterprise value and market value estimated by the free cash flow discount model.At the end of 2017,Gree has a stock market value of 43.77 yuan,which is basically consistent with the stock market value predicted by the free cash flow method of43.85,so it can be considered free.Cash Flow Model can well predict the enterprise value and provide a reference for the valuation of other companies in the industry.