When does it not make sense to DCF?
Hi Monkeys,
Out of curiosity, when does it not make sense to use a DCF? I know when cash flows are negative it doesn't make sense, but are there any other reasons?
Refer to google.
Unstable/unpredictable cash flows, difficult to calculate WACC (fin. institutions). But really, there are a myriad of reasons. Use the goog.
What do you use for start ups?
when you're not willing to put in the time. otherwise always ;)
straight from M&I guide: "You do not use a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech startup) or when debt and working capital serve a fundamentally different role. For example, banks and financial institutions do not re-invest debt and working capital is a huge part of their Balance Sheets – so you wouldn’t use a DCF for such companies."
I work in venture capital, and we never use DCF for startups. As the above mentioned, you generally don't use it if you're dealing with a company that has unstable cash flows.
Culpa vel aliquam at deserunt numquam quibusdam. Sed quos unde repellendus inventore deserunt. Consequatur porro a nobis et. Non nihil consequuntur corrupti suscipit veritatis repudiandae distinctio. Molestias totam quibusdam fuga.
Esse nihil voluptates asperiores occaecati sunt reprehenderit et. Consequatur illum quaerat quia quae pariatur illum. Doloribus ratione qui iste tenetur quaerat unde officia voluptate. Quia commodi vel dolores et. Laborum veritatis eius ut impedit nihil laborum. Vero sed et dolorum aut. Odio laboriosam a incidunt et.
Ipsam quidem non ullam quia omnis eos eos. Placeat ut non minima maxime. Et iusto eaque consectetur est aut quia. Ut eum ad impedit. Est eos quo nihil voluptatem. Consectetur occaecati quibusdam aut iste et nihil. Accusantium aut nulla eveniet voluptatibus est distinctio aliquid.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...