Discounted Cash Flow (DCF) Model – CH 3 Investment Banking Valuation Rosenbaum

The discount cash flow analysis (DCF) is a fundamental valuation methodology broadly used by investment bankers, corporate officers, and other finance professionals. It is based on the principal that the value of a company can be derived from the PV of its projected free cash flow (FCF).

While many videos cover the actual framework and how to build the excel model, the assumptions and thinking behind the model are often left to more “real world” examples. This is that example!

Chapter 3 covered topics like;
- How do you project revenues for a DCF model?
- How many years do you project cashflows for?
- What is the exit multiple method?
- What is the perpetuity growth method?
- How do you project EBITDA for a DCF model?
- How do you project EBIT for a DCF model?
- How do you project the NWC for a DCF model?
- What is the mid-year convention?
- How do you calculate unlevered free cash flow?

For those who are interested in buying the Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions by Joshua Rosenbaum and Joshua Pearl, follow the Amazon link below;

https://www.amazon.ca/Investment-Banking-Valuation-Leveraged-Acquisitions/dp/1118656210

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For those who may be interested in finance and investing, I suggest you check out my Seeking Alpha profile where I write about the market and different investment opportunities. I conduct a full analysis on companies and countries while also commenting on relevant news stories.

http://seekingalpha.com/author/robert-bezede/articles#regular_articles

Videos referenced;

Estimating Cost of Debt For WACC:
https://www.youtube.com/watch?v=CSkPlxEe-dY

Estimating Cost Of Equity For WACC:
https://www.youtube.com/watch?v=ZigyWoDAMrE

Projecting NWC;
https://www.youtube.com/watch?v=2E1Hca2dVbI

Why Is Your DCF Model Incorrect?
https://www.youtube.com/watch?v=ByyK0AMuLxc

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