Estimating growth in net cash flows is one of the key components in applying the discounted cash flow (DCF) method in valuing any company, reporting unit, or other business unit. This paper explains the underlying assumptions of the DCF method and demonstrates how to compare the most commonly used basis for estimating net cash flows (sometimes referred to as free cash flows), expected organic growth, to historic estimates of growth of the subject company and estimates of earning growth commonly prepared by security analysts.
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Research Article| April 06 2021
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Roger J. Grabowski; Comparing Growth Rates Used in Discounted Cash Flow Valuations. Business Valuation Review 1 January 2021; 40 (1): 2–12. doi: https://doi.org/10.5791/20-00007.1
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