A DCF analysis is premised on the principle that the value of a company can be derived from the present value of which of the following?

Question

Quizplus · Accepted Answer

A DCF analysis is based on the present value of future free cash flows. Free cash flow is the amount of cash generated by a business that is available for distribution to all investors after all operating expenses, capital expenditures, and taxes have been paid. Revenues, gross profits, and net working capital are all important metrics to consider when evaluating a company, but they are not the basis for a DCF analysis.

A DCF Analysis Is Premised on the Principle That the Value