Discounted Cash Flow (DCF)

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What it means

Value a business as the PV of its projected free cash flows plus terminal value.

Why it matters

The gold-standard intrinsic valuation used in M&A, IPOs, and strategic planning.

How to calculate — with Cawan's Shoes

Enterprise Value = Σ FCFt/(1+WACC)^t + TV/(1+WACC)^n, TV = FCF_n×(1+g)/(WACC−g). Cawan's: $80M FCF, 3% growth, 9% WACC → TV $1.42B.

What's at stake if you ignore this

Weak assumptions = wildly wrong valuation. Sensitivity-test everything.