A Case Study Of FAW Toyota Corporate Value Assessment Based On Improved DCF Model

With the development of asset assessment business in China,corporate value assessment plays an increasingly important role.It not only provides value reference for transaction activities among enterprises,but also supports business decision and investment activities for investors.In asset valuation practice,the widest use is the mean of cost.There is no doubt that the importance of the income approach and the market approach has also attracted more attention.The automobile industry is closely related to many industries which influence the national economy.And it is an important driving force for the promotion of China’s economic development.At present,there are not enough valuation cases of automobile companies,which are mostly concentrated in listed companies and using market methods.However,considering that the data disclosure of non-listed companies is incomplete,the accuracy of market approach is greatly reduced.The income approach,considering the evaluating objects as a whole,is very important for the evaluation of the value of automobile companies,especially the valuation of non-listed automobile companies.Traditional income method does not take into account its special cyclical industry characteristics when assessing the value of auto companies.There is a apparent controversy on the division of the income period and the choice of discount rate,which affects the accuracy of the assessment results.This article takes the evaluation of the total equity value of shareholders of Tianjin FAW Toyota as an example.Firstly,it introduces the evaluation process and results of both the market approach and the income approach,analyzes the assessment results,summarizes the errors in the original assessment results,and addresses the cyclical nature of the company.The deviation proposes improvements to the DCF.This article mainly aims to improve the setting of the forecast period.Then,a detailed analysis of the basic characteristics,future development prospects of the auto industry,and the development plan of Tianjin FAW Toyota with scenario analysis in order to set forecast horizons for different prospects.The main purpose is avoiding the huge deviations which use only one single outlook.After calculating the company’s future cash flow,calculate the total equity value of shareholders in different prospects.Through using expert scoring method to set weights for different prospects,weight the different prospects.Comparing the assessment results using the improved DCF model with the original assessment results,verify the accuracy.Finally,review the overall research process,put forward conclusions and deficiencies,and look forward to future research directions.