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Company A has 100% customer concentration, which means that i. this customer will have a lot of bargaining power, potentially impacting margins, and ii. if the customer leaves/goes out of business, you go out of business. Meanwhile, Company B has its customer base diversified across 100 clients, meaning that it is not especially sensible to the actions of one of those clients and that no client will carry bargaining power. So clearly Company B is more valuable.

Company A carries more risk, and it should have a higher cost of capital, so the discount rate in the DFC should be higher, making the Present Value of the company lower. 

 

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