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What is Discounted Cash Flow?
A method that values a company by discounting its future cash flows to their present value.
ExampleAccording to the DCF analysis the company is worth TRY 150; at a market price of TRY 120 it trades at a discount.The figures in the example illustrate the concept; they are not current market data.
Related terms
Free Cash FlowThe actual cash left after subtracting capital expenditures from operating cash flow.Discount RateThe rate used to discount future cash flows to today; it reflects risk and the time value of money.Enterprise Value (EV)Market value plus net debt; it represents the real cost of acquiring the company.Internal Rate of ReturnThe discount rate that makes an investment's net present value zero; a measure of investment profitability.Fair ValueThe intrinsic value of an asset calculated with fundamental analysis methods.Cash FlowThe cash moving into and out of a company over a period; it has three parts: operating, investing
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Frequently asked questions
What is Discounted Cash Flow?
A method that values a company by discounting its future cash flows to their present value.
What is Discounted Cash Flow called in Turkish?
In Turkish financial reporting and news, Discounted Cash Flow is called DCF (İndirgenmiş Nakit Akışı).
Which concepts are related to Discounted Cash Flow?
The concepts most often mentioned together with Discounted Cash Flow are Free Cash Flow and Discount Rate.
More terms in Fundamental analysis
Active ManagementAlpha (α)ArbitrageAsset AllocationBalance SheetBear MarketBeta (β)BondBull MarketCapital Expenditure (Capex)CorrelationDilutionDiversificationDividendDividend YieldEarnings Per ShareEarnings ReleaseEarnings SurpriseEquityEV/EBITDAGross Profit MarginGrowth StockHigh-Frequency Trading (HFT)Income StatementInsider TradingInvestment InstrumentsLeverageLiquidityMargin CallMarket CapitalizationNet Profit MarginOpen PositionP/B Ratio (Price-to-Book)P/E Ratio (Price-to-Earnings)PortfolioReturn on AssetsReturn on EquitySharpe RatioShort PositionSpreadStop-LossStop-Loss OrderValue StockVolatilityWeighted Average CostWeighted Average Cost of Capital