Forecasting Free Cash Flow In Enterprise Value Evaluation Based On ARIMA Model

With the development of economic system reform in our country,the flow of enterprise resources,such as merger and reorganization,occurs frequently,and the demand for enterprise value assessment is increasing.At present,enterprise value evaluation has been widely used in investment decision making,credit management,acquisition merger and enterprise value management,but due to the influence of the authenticity of financial information,the adjustment of accounting policy and the choice of accounting method,the result of enterprise value assessment is very different from the internal enterprise value.Therefore,the choice of evaluation method in enterprise value evaluation becomes more and more important.Along with the scale of China’s corporate mergers and acquisitions,the information asymmetry and improper choice of evaluation methods tend to result in overvaluation or undervaluation.As far as our country is concerned,there are three methods to evaluate the value of enterprises,namely,income law,market law and cost law.As the main method of enterprise valuation,the income method occupies more and more important position in the field of evaluation.The expected income,the period of return and the discount rate are three important parameters of the income method.Based on the basic theory of the income method,this paper analyzes the determination of the expected income index under the income method,and chooses the free cash flow as the expected income index,in order to make the result of the valuation more realistic and reasonable.This paper introduces the traditional method of profit index prediction in enterprise value evaluation,analyzes the inapplicability of the traditional method,combines the ARIMA measurement model with the prediction of income index,and expounds its application and feasibility.The aim of this method is to improve the precision of the forecast expected profit value and serve the forecast of enterprise value.This article is divided into four parts: the first part is the introduction,as well as the research background,the research significance and the research idea about this article,summarized the relevant theories at home and abroad research status,clarified the research purpose of this article,and put forward the research innovation points and the existingshortcomings.The second part is the relevant theory introduction in the enterprise value assessment,and puts forward the corresponding suggestion to the enterprise expected income index,and introduces the enterprise free cash flow calculation and forecast method.The third part analyzes the limitations of the traditional methods of predicting the future cash flow of enterprises,and puts forward that ARIMA model can be used to evaluate the advantages of free cash flow forecast in enterprise value assessment,and analyzes the feasibility of practical operation.In the fourth part,the ARIMA measurement model is applied to the forecast of free cash flow of enterprises,and the forecast value is compared with the actual value,the rationality of the forecast is analyzed,and the results are compared with the other methods.Finally,the model is evaluated and the corresponding conclusions are reached.