Research On The Improvement Of Volatility In Cash Flow Forecast In Enterprise Value Evaluation During The Sustainable Period

When we use DCF model method to evaluate enterprise value,the value of more than 50%comes from the cash flow in continuing valuation.Therefore,the extent of reasonable on the part of the cash flow forecast will have a huge impact the quality of the final evaluation.Due to the forecasting period is so long and determining the parameter is too difficult,appraiser will generally develop its predictions based on the stable basic assumptions of the enterprise internal and external conditions and take the form of simple smooth processing with only a single value forecasting cash flow on the stage in bulk.While in the process of forecasting the cash flow during the sustainable period,large time span,that there are many differences between the discount coefficient of different years,leading to the order of volatility of cash flow will have a significant impact.Processing mode of volatility,therefore,will be directly impact the evaluating quality.For the forecasting of cash flow during the sustainable period,in this paper,first of all,from two aspects of theory and empirical analysis the harm created by one who do not considering of cash flow volatility;Then,to improve the defect,this paper puts forward a modified model which using triangular distribution defined distribution types and periodic parameters to simplify the traditional monte carlo simulation,for the purpose of add the volatility when one predict cash flow in bulk;Behind,to demonstrate the advantage of' the improved model,this article from the accuracy,stability,significant three angles has carried on the contrast test;After setting up the model and demonstrating advantages,next,combining the feature of volatility mode,this paper carry on the theory discussion and practice guidance from the operating level in the operating process and the determine of parameters;Finally this paper combining with a case shows the operation process and summarizes.To valuation quality,this paper aims at building assessment framework which is able to guide the use of information of volatility which is mastered by the appraiser.