BV817-CON Potential Pitfalls of FCF Forecasting in the Terminal Period

CE 1 | BV

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Session Description

In applying the discounted cash flow (DCF) method, there are common errors that occur in the terminal period ranging from over/under investment in fixed assets, working capital, and amortization impacts.  Our presentation will cover common mistakes to avoid when projecting the free cash flow in the terminal period.  In addition, we will cover the "Value Driver Models" (e.g., McKinsey and Bradley-Jarrell) for forecasting net investment into perpetuity.  Finally, we will discuss potential issues surrounding accounting vs. economic measurements of investments made by companies.

Speaker Information

Joseph Thompson, ASA, Director | The Griffing Group
David Neuzil, Consultant | The Griffing Group

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Disclaimer: The opinions expressed in this presentation are that of the presenter(s) and do not necessarily reflect the views and opinions of the American Society of Appraisers.

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