Discounted Cash Flows
This technique is highlighted in the Leading with Finance as the gold standard of valuation. Discounted cash flow analysis is the process of estimating the value of a company or investment based on the money, or cash flows, it's expected to generate in the future.
Which valuation method is the best Why?
Discounted Cash Flow Analysis (DCF)\n\n In this respect, DCF is the most theoretically correct of all of the valuation methods because it is the most precise.
What valuation method usually gives the highest valuation and why?
Precedent transactions are likely to give the highest valuation since a transaction value would include a premium for shareholders over the actual value. The DCF would likely rank next, but that would largely depend on the quality of the assumptions applied.
What is the best valuation approach?
The preferred method for the valuation of a company that is growing rapidly is to discount the expected future earnings of the company.