Assess The Value Of Dairy Companies Based On Free Cash Flow Method

Chinese dairy industry started late,with low starting point, but growing rapidly. Especially since the reform and opening up, the rapid increase in milk production of double-digit annual growth rate, Especially since the reform and opening up much higher than the world average of1%over the same period. Chinese dairy production and output value in the last10years increased by more than10times, has gradually attracted the eyes of the world.But in September2008,the "melamine" incident makes the credibility of the entire industry suffered a serious crisis, a sharp decline in the domestic market, consumer confidence frustrated, almost all dairy companies are caught in extreme difficulties. Under steady recovery in2009, the country’s macroeconomic, industrial support policies to restore market confidence and to show the effect of factors such as the role of the dairy industry began to exhibit exuberant vitality.However, with the rapid development, investors and managers how to properly evaluate the true value of companies? This requires an assessment of the value of the business.Business Valuation referred business enterprise valuation, the purpose is to analyze and tired of a business or an operating unit of the fair market value, and to provide information to help investors and authorities to improve decision making. With the development and improvement of business valuation theory, there are a large number of scholars have proposed a variety of assessment models, in many assessment model, exactly what model it is suitable for dairy enterprises?Firstly, through the introduction of the research background to explain the necessity of dairy enterprises in business valuation and importance, and then review the development of enterprise value assessment study abroad, to expect to find ideas from the wisdom of many scholars. Then, the article lists a brief introduction of three methods commonly used to assess, and then by comparing the advantages and disadvantages of each method in assessing when the dairy business, and ultimately chose the income approach as a method of assessment. Next, details of the evaluation of the use of fat free cash flow by building one by one break to assess the difficulties that may be encountered in the model, and this applies to the company’s enterprise value assessment of Erie, and then concludes: The free cash flow method to evaluate the dairy company is relatively reasonable and effective. Finally, the issues and feelings encountered in the evaluation process for this study were summarized, and may make future development direction.