Research On Enterprise Value Evaluation Of Company A Based On Free Cash Flow Method

With the growing development of China’s market economy,economic activities such as enterprise restructuring,mergers and acquisitions,and liquidation are gradually increasing.Under the background of accounting information distortion and accounting indicators being unable to effectively measure the ability of enterprises to create value,it is particularly important to obtain accurate,objective and true enterprise value.Affected by the slowdown of domestic economic growth and epidemic situation,the household appliance industry has fallen into such difficulties as performance decline,lack of industry development momentum,and wage and price cuts due to insufficient domestic demand.In order to accurately evaluate the value of household appliance enterprises,so as to help managers improve their decision-making and get out of difficulties,and also to further improve the theoretical research of enterprise value evaluation in China,and improve the accuracy of investors’ investment decisions,this paper selects kitchen appliance enterprise A in the household appliance industry as the case study object.First of all,this paper combs the relevant literature of enterprise value evaluation,summarizes the relevant theories and methods of enterprise value evaluation.Secondly,the operating environment and operating conditions of Company A were analyzed,and the valuation of the traditional P / E ratio method and dividend discounts was adopted to point out the problems of the traditional valuation method.Then,the two-stage free cash flow model was introduced to evaluate the overall value of the company.Finally,taking the market value of Company A on the benchmark date as the benchmark,we compare the evaluation results of the two methods,draw a conclusion and propose safeguard measures to enhance the enterprise value.The results of the study show that the market value of Company A’s assessment date is34.184 billion yuan,and the use of traditional P / E ratio models to estimate that the market value of Company A is 26.098 billion yuan,evaluating the impairment of 23.65%;The internal value was 51.665 billion yuan,the evaluation value of 51.14%,exceeding the reasonable error rate of 30%;the use of free cash flow models to evaluate the overall value of Company A was35.559 billion yuan,of which the equity value was 35.498 billion yuan.The value-added of3.84% is also much higher than the valuation results of the P / E ratio method.Therefore,it is concluded that compared with the traditional methods,the free cash flow method can more accurately reflect the internal value of the enterprise,and can achieve the value-added effect in a reasonable range.In addition,the valuation results show that Company A has a certain appreciation space,which can provide useful information to managers and investors to help them improve their business decisions and investment decisions,and also provide reference for the value evaluation of other household appliances enterprises to jointly promote the development of the household appliances industry.