DCF Valuation Question - EV to PPS
Do you use current year or projected debt balance in DCF to get to projected price per share from enterprise value?
Example, doing a DCF to get a current enterprise value as of today 9/5/2021 in order to back out a theoretical price per share.
As of 9/5/2021 (valuation date) debt is 400MM, cash is 100MM
At end of projection period say 9/5/2026 debt is 100MM with a cash Balance of 300MM
Which figures do you use to get to the theoretical price per share? Projected net debt or net debt as of valuation date?
I know I should know this I just forgot
It’s net debt day of valuation. Equity value is the value to shareholders so if the company sells for your discovered EV then you would be concerned with what creditors are owed as of that day.
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