Cash Flow Analysis Essay

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The past few years have seen a remarkable transformation in the Indian Shopping industry. E-commerce has taken the retail world by storm as can be deduced from the rising number of businesses adopting the electronic route with various distribution and commercial models. The rapid growth of the industry has seen firms reach multi-billion dollar valuations within a few years of their establishment. The e-commerce sector has grown by approximately three times over the past four years and market estimates indicate that it will further grow about five to seven times in the forthcoming years. Online retail, though just a small fragment of the e-commerce industry, is one of the fastest growing segments. Logistics and infrastructure have grown multi-fold…show more content…
This method involves identification of free cash flows in and out of the company and estimation the Net Present Value of these cash flows. The DCF Analysis usually employs two methods to determine the net worth of a company: (a) the Adjusted Present Value (APV) method, and (b) the Weighted Average Cost of Capital (WACC) Method Comparable Transactions Method When the net worth of a company is estimated at the time of a merger or an acquisition, one of the most commonly used practices to arrive at a value is to compare the transaction with other transactions that have taken place in the concerned sector over the past few years. While using Comparable Transaction Method, we identify a key parameter such as Gross Merchandise value (GMV), annual revenues or multiples of earnings before interest and taxes (EBIT). Using this key valuation parameter is, the companies under consideration can be compared and the valuation of the company may be determined by using suitable…show more content…
The Market Valuation approach is used to determine the value of a firm by comparing the frim concerned with other organizations in the same sector, with similar operations, similar prices and volumes of goods or services traded. Though similar to the Comparable Transactions Method in many respects, it is generally preferred over the latter in case of real estate estimation. The market capitalisation of the firm is calculated using the prevailing market price of shares and the volume of shares traded. By comparing the market capitalisation of the firm with that of the other frim, the net worth can be estimated by using suitable

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