The discounted cash flow method is a method of calculating a company’s appraisal value based on the total present value of cash flow expected to be created in the future, which is one of company evaluation methods. The discounted cash flow method is also called the DCF method. For example, to discount the future 1.5 million yen to the present value based on the idea that the current 1.5 million yen is worth certainty etc. from the future 1.5 million yen. It can be said that it is one kind of profit return method in a broad sense by a method of setting the future revenue outlook as the corporate appraisal value by redefining the future profit outlook to the current value. As a method of calculating the present value, it can be calculated by dividing the expected future cash flow by the number multiplied by the number of years multiplied by the capital cost plus one. For example, it is expected that future cash flows to be generated will be 100,000 yen. When the capital cost is 10% Calculate that the present value after 4 years is 100,000 yen / 1.1 the fourth power. Then it can be considered that the investment amount of 68,301 yen or more does not match profitable.
Judgment criteria in case to consider as M & A investment case
When exercising the Discounted Cash Flow Law in the sale of the company, it is not clarified how the evaluation as a company to be developed is dealt with in correspondence. And this situation is a very important judgment criterion even in case of considering the company sale as an investment case with M & A in mind. Generally, with regard to the discounted cash flow method developed under the comparable company comparable law, which is taken up as the best method of calculating the value of the company in total, the stock price of the company subject to sale and the company itself In addition to the related laws and the price method that links the value of net assets as market value in the sale of the company. With respect to the market value of the stock owned by another company in the same industry deployed under the discounted cash flow method, the value of the target company to which M & A is applied is calculated by calculating the ratio of both the total amount and the profit, and the synergistic effect It will become a law that can anticipate.