Finance glossary
DCF
Definition
Discounted Cash Flow, valuing a business by projecting and discounting future cash flows.
DCF is a valuation method that estimates the present value of expected future cash flows using a discount rate, typically WACC. If the DCF value exceeds the current price, the asset may be undervalued. It is highly sensitive to assumptions about growth rates and discount rates.
In a sentence
Her DCF model valued the company higher than its share price, hinting it was undervalued.
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