Comparative Analysis And Application Of FCFF And FCFE Models In Corporate Equity Valuation

In the market economy,the rapid development of the enterprise merger,restructuring,reorganization,equity transfer and other related transactions,the evaluation of corporation.But in the practice of the enterprise value evaluation,the evaluate tends to favor corporate cash flow discount method,equity cash flow discount method is not widely used.In view of the actual complexity evaluation case,special two model using a more robust characterization of the case itself.In order to focus on the influence factors of equity value assessment model,explores the two models existing in the theory and practical problems.Firstly,the formula to verify the valuation of the same two models in theory.The corporate cash flow and equity flow in theory and application and other aspects of a comprehensive comparative analysis,summarizes the factors affecting the value of equity theory.Finally based on free cash flow in the model selection,market risk premium and beta parameters such as selection and application.On the basis of theoretical analysis,the historical financial data of a non-listed company of A enterprises,enterprises use discounted free cash flow and equity discounted cash flow,the company's free cash flow is calculated,and the combination of industry and company analysis and forecast the company's future free cash flow,and then combined with the CAPM model.Complete analysis in the evaluation point of the equity value of the company.The results showed that:(1)equity cash flow discount method to calculate the value of equity is greater than the enterprise equity value of the discounted cash flow method.(2)The change of capital structure influences the selection of beta.After analysis of factors affecting equity value is different,according to the basic idea of iterative method,focuses on the adjustment of the capital structure of enterprises can get reasonable equity value.Combining the theory and case analysis,we can obtain:(1)the enterprise value evaluation,can be estimated the change of enterprise's financial ratios to establish a model to improve the precision of free cash flow.(2)the capital structure as the enterprise life cycle in the changing process,should fully consider the complexity of the enterprise's own development,to the enterprise to carry on the reasonable valuations.