This post includes an important topic of stock valuation. And the topic is Discounted Cash Flow Method or DCF Method. Dcf valuation helps to find the intrinsic value of stocks.
Dcf valuation method is a very popular method of valuation. The concept of dcf valuation formula is very simple. To understand discounted cash flow formula you should know about free cash flow ?
Free cash flow means the company's cash except total expenditure. This is the cash flow that remain after the total expend,tax of the company. For this it is called free cash flow.
Company can use this cash for any work like company can acquire,expand,give dividend to its shareholder,share buy back etc. Let's see how to calculate free cash flow.
Net profit is an initial point. The real game is on the hand of cash flow statement. Because company's real movement can be seen in cash flow statement
because here you can see how much money come to the company and out from company. And the important point is that it is impossible to manipulate cash flow statement