Purpose – The aim of this paper is to answer the question: Do discounted cash flows valuation methods provide always the same value? Design/methodology/approach – This paper is a summarized compendium of ten methods including: free cash flow; equity cash flow; capital cash flow; adjusted present value; business's risk‐adjusted free cash flow and equity cash flow; risk‐free rate‐adjusted free cash flow and equity cash flow; economic profit; and economic value added. Findings – All ten methods always give the same value. Research limitations/implications – The disagreements among the various theories of firm valuation arise from the calculation of the value of the tax shields (VTS). The paper analyses nine different theories. Originality/value – The paper is an analysis of ten methods of company valuation using discounted cash flows and nine different theories about the VTS.
Managerial Finance – Emerald Publishing
Published: Oct 2, 2007
Keywords: Cash flow; Organizations; Discounted cash flow
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