DCF

 DCF

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In finance, DCF stands for Discounted Cash Flow. It is a valuation method used to estimate the value of an investment, project, or company based on its expected future cash flows, adjusted for the time value of money. [1, 2]

How DCF Works

Future Projections: Estimates cash a business or asset will make in future years.
Discount Rate: Uses a rate (often the Weighted Average Cost of Capital, or WACC) to reduce future money into today's dollars.
Present Value: Sums up these discounted values to find the total intrinsic worth. [1, 2, 3]

Key Uses

Investing: Finding if a stock is cheap or expensive compared to its market price.
Corporate Finance: Deciding if a new business project is worth the cost. [1, 2, 3]

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