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Problems in justifying the accuracy of projected Free Cash Flow DCF-based valuations
[Problémy při odůvodňování správnosti plánovaných odčerpatelných peněžních toků v oceněních založených na metodách DCF]

Author

Listed:
  • Jaroslav Brada

Abstract

The paper has shown by which procedures the correctness of the constructed plans of the drainable FCFs in two-phase DCF methods can be disassembled. Using the falsification principle (K. Popper), it is reminded that the correctness of the constructed Free Cash Flow FCF) cannot be known and confirmed. The only logically incorrect plan of the constructed FCF can be known. Some ways of misrepresenting the size of the FCF from economic reality are presented.

Suggested Citation

  • Jaroslav Brada, 2021. "Problems in justifying the accuracy of projected Free Cash Flow DCF-based valuations [Problémy při odůvodňování správnosti plánovaných odčerpatelných peněžních toků v oceněních založených na metodá," Oceňování, Prague University of Economics and Business, vol. 14(3), pages 3-20.
    • Handle: RePEc:prg:jnloce:v:14:y:2021:i:3:id:2021_3_01:p:3-20
    DOI: 10.18267/j.ocenovani.263
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    More about this item

    Keywords

    Free Cash Flow; DCF valuation; Planing in DCF; Oceňování DCF; Plánování v DCF;
    All these keywords.

    JEL classification:

    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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