Valuation Question - Very basics questions
This may seem a very basic question to some but i appreciate any serious replies :
Supposing you come up with a DCF value - which is say an FCFE or FCFF value whichever. And you also have a valuation based on the net assets of the company - will you add the 2 values ?
DCF Value 52$ /share
Net Asset Value - 15$ /share
Is the valuation the sum of these two = 52 + 15 ?
Theoretically, the DCF value is the earnings power of the company. So all operational assets should not be added but all non-operational assets eg investments etc should be added.
Please help.
Thanks
What are you asking? Your question makes it seem like FCFE and FCFF are interchangeable...the DCF value you get will be the indicated business enterprise value on a marketable, control basis if its FCFF. These are cash flows for both equity and debt holders. Net asset value is your equity, or assets minus liabilities. So, you'd be double-counting equity by adding equity. Just know whats in your DCF cash flow to get the value of those investments and make sure you're using the appropriate discount rate.
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