Valuation FCF
Hi @all, this might be a super stupid question but I'm new to this whole topic. Regarding a valuation based on the free cash flow, why don't I also take the value of my assets on the balance sheet into account for a valuation? So I mean, I'm only regarding my future cash flows, but due to the ownership, I also have a claim on the assets... Thanks!
That's one way to do a valuation, that's called a liquidation valuation. It's less common than the income based DCF. If you take a step back and think, what are your assets doing? You have the assets to generate cash flow to the company. The income based approach looks at how much income you'll be receiving from operations.
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