DCF
Business & Finance abbreviation · Finance
| Stands for | Discounted cash flow |
|---|---|
| Categories | Business & Finance |
DCF stands for Discounted cash flow, a finance abbreviation.
Valuation method that estimates what a business, project or asset is worth today by forecasting its future free cash flows and discounting them at a rate reflecting risk, usually WACC. A terminal value captures cash flows beyond the explicit forecast period.
Example: Our DCF puts the company's equity value at $41 a share, about 15 percent above the current price.
Usage notes
DCF is the main intrinsic-valuation approach taught in finance courses and used in fairness opinions and equity research. The terminal value often accounts for well over half of the result, so assumptions about long-term growth and the discount rate dominate. It is usually cross-checked against trading comparables and precedent transactions.
Related abbreviations
More finance abbreviations
- CapEx – Capital expenditure
- CAPM – Capital asset pricing model
- CCC – Cash conversion cycle
- CIM – Confidential information memorandum
- CVC – Corporate venture capital
- D/E – Debt-to-equity ratio
- DCM – Debt capital markets
- DD – Due diligence
- DIO – Days inventory outstanding
- DPI – Distributions to paid-in capital
- DPO – Days payable outstanding
- DSCR – Debt service coverage ratio