A Discounted Cash Flow (DCF) is a valuation method to determine whether a business is a worthy potential investment. Either valuing a project, company, or assets using the concepts of the time value of money. A DCF is calculated by using future free cash flow projections then discounted by using the required annual rate to determine the present value estimates. The result will then be used as a reference to evaluate the potential for investment. An investment is deemed a good one if the result derived at is higher than the current cost to get the investment.
Making use of the DCF Valuation Method, a DCF model is then created to represent the figures derived in a structured way. A DCF model is a type of financial model that makes use of the DCF valuation method to evaluate a business, a project, an investment, or an asset. Many businessmen, entrepreneurs, and venture capitalists refer to a DCF model first to help in their decision-making in potential investments and to ensure if the investment is worth it. It is also the most commonly used valuation method since it considers the time value of the cash flows, resulting in an accurate valuation.
Using a DCF model is a critical skill for experts like investment bankers, private equity, equity research and “buy side” investors. For those who didn’t have time to create their own DCF model or those who doesn’t know how to create a DCF model from scratch, they can always acquire DCF Model templates available for download. You can download them here: DCF Model.
These templates are usually included with charts and come in excel files to have a professional look and better structured view of all projections that needed to be taken note of. Also, in the excel files are calculation algorithms and formulas, automatically calculating everything for you as you input all the figures that you need to be analyzed, making your work even faster and cleaner.
If you are in need of other financial model templates for different industries and use cases, you can check the website eFinancialModels. There you can download a wide range of industry specific financial model templates in Excel, made by financial modeling experts which can greatly help you save significant time with your financial modeling tasks. You can certainly take advantage and get the benefit of using already existing industry and financial modeling know-how for a lesser price compared to hiring a professional. So, no more spending too much time and download a DCF Model template today!