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?
| +326 | UBS Tech MD hires Son (from no-name college) as an Intern | 57 | 11h |
| +241 | Evercore Intern Seizure | 35 | 2h |
| +90 | [Official] 2026 IB Analyst Bonus Megathread (with 2025 Consolidated Pay and Perks/Benefits) | 12 | 2d |
| +55 | Is DCM actually underrated ? | 21 | 10h |
| +54 | JPM M&A is Gone??? Purely Coverage Banking??? | 22 | 2h |
| +46 | Are all Tech / TMT groups sweaty? | 33 | 22h |
| +40 | Losing my personality in Banking | 6 | 33m |
| +38 | Am I behind? 31 Year Old Analyst | 9 | 1d |
| +38 | Associate & Above IB exits | 15 | 3h |
| +31 | Incoming IB Analyst: Best Ways to Prepare? | 8 | 2d |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
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.
Reprehenderit ut blanditiis non explicabo fuga rerum sint amet. Consequatur aspernatur nam ea ipsa delectus officia. Doloribus nihil enim nesciunt quod perferendis repellat quaerat suscipit.
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...