Evaluation And Management Of The Value Of The D Company Based On Free Cash Flow Method

a recent years,with the continuous development and improvement of the capital market,the corporate management practice goal has gradually changed from profit maximization to value maximization,and management practice and enterprise value maximization need to be further coordinated and unified.Corporate value management is the product of this trend,emphasizing that the ultimate goal of corporate management behavior is to maximize corporate value,and the foothold of value management is to establish an enterprise value evaluation model,so as to effectively evaluate and guide business strategy,investment and financing decisions,mergers and acquisitions,restructuring,performance appraisal and other business behaviors.How to evaluate the value of enterprises has become a difficulty in China's capital market and also a hot spot.Different information users have different uses for the results of enterprise value.Investors can deepen their understanding of the target enterprises according to the evaluation results,so as to judge the feasibility and risk of investment.When enterprises are faced with problems such as merger,purchase and reorganization,they also need to use enterprise value assessment,so the specific methods and models of enterprise value assessment that can be applicable and have the significance of research and assessment have become the focus of many enterprises.Enterprise valuation is an important means to analyze and measure the intrinsic value of an enterprise or a business entity,and to provide relevant information to help investors and management improve decision-making and rational investment.Whether from the standpoint of investors or in the management,the study of enterprise value evaluation has a very important practical significance.The free cash flow method selected in this paper is the most widely used and theoretically the most sound method in the international enterprise value evaluation.By studying the foreign classical literature and the views of famous professors in China,we can understand the requirements and significance of this method in detail.This paper explains the concept of free cash flow method and gives its model.The two elements of free cash flow method is free cash flow and discount rate,should be able to use this model to estimate the future cash flow of enterprise,at the same time,according to the requirements of the relevant cash flow to get the discount rate,after the enterprise value is calculated based on the analysis of the value of the company management,in hopes to provide certain reference function on the value of management practice.Taking company D as a case study,this paper makes a detailed analysis of the feasibility of free cash flow method in the value assessment case of company D,mainly from the perspectives of industry competition,operation status quo,financial indicators,etc.,providing a basis for the application of free cash flow method in the value assessment of company D.In the process of value evaluation,according to the free cash flow method,the future development of company D is divided into forecast period and subsequent period,the future cash flow is predicted according to the historical operating situation,the weighted average cost of capital is calculated according to the cost of debt capital and the cost of equity capital to determine the discount rate and other parameters.Finally,the enterprise value of company D is calculated according to the model.From the results,the value evaluation results of company D objectively reflect the ability of company D to obtain cash flow in the future,thus further verifying the rationality of free cash flow method.The free cash flow method will gradually show its superiority due to its characteristics of data accessibility,process standard uniformity and operability of verification.