Growth plays a critical role in DCF valuations
Abstract: Valuators often turn to the discounted cash flow (DCF) method when appraising a new or growing business. This technique allows for significant flexibility in assumptions about growth. Moreover, it also can be useful when valuing struggling companies that are in a state of flux. This article explains the DCF method and the qualitative and quantitative factors involved. A sidebar takes a closer look at growth and the terminal value.