Advances in Economics, Management and Political Sciences
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Proceedings of the 2023 International Conference on Management Research and Economic Development
Series Vol. 26 , 13 September 2023
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Discussion on the Advantages and Disadvantages of the DCF Model in the Current Era and the Improvement of the Model
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Abstract
The discounted cash flow model is a company value evaluation method widely used by many domestic investors when investing company. However, under the background of the epidemic, due to factors like low benchmark interest rates that are not conducive to the valuation of the DCF model, the accuracy of the discounted cash flow model valuation has been questioned. In addition, the DCF model is not entirely applicable to the domestic market because of the multiple systems and the local capital market's imperfections, so the model needs to be improved. In this paper, the existing literature is summarized, and it was found that the time series analysis method can be used, which can predict the company's future cash flow more accurately, instead of the sales ratio analysis method, while the discount rate can be calculated more accurately by substituting each company's beta into the calculation instead of using the company's industry beta.
Keywords
enterprise valuation, DCF model, Pros and Cons, improvement
References
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Data Availability
The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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- Volume Title
- Proceedings of the 2023 International Conference on Management Research and Economic Development
- ISBN (Print)
- 978-1-915371-95-9
- ISBN (Online)
- 978-1-915371-96-6
- Published Date
- 13 September 2023
- Series
- Advances in Economics, Management and Political Sciences
- ISSN (Print)
- 2754-1169
- ISSN (Online)
- 2754-1177
- DOI
- 10.54254/2754-1169/26/20230544
- Copyright
- 13 September 2023
- Open Access
- This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited