When Would You Not Use A Dcf In A Valuation?

1.	When Would You Not Use A Dcf In A Valuation?
Answer» You do not USE a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech startup) or when debt and working capital SERVE a fundamentally different role. For example, banks and FINANCIAL INSTITUTIONS do not re-invest debt and working capital is a huge PART of their Balance Sheets - so you wouldn't use a DCF for such companies. You do not use a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech startup) or when debt and working capital serve a fundamentally different role. For example, banks and financial institutions do not re-invest debt and working capital is a huge part of their Balance Sheets - so you wouldn't use a DCF for such companies.

Answer»

You do not USE a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech startup) or when debt and working capital SERVE a fundamentally different role. For example, banks and FINANCIAL INSTITUTIONS do not re-invest debt and working capital is a huge PART of their Balance Sheets - so you wouldn't use a DCF for such companies.

You do not use a DCF if the company has unstable or unpredictable cash flows (tech or bio-tech startup) or when debt and working capital serve a fundamentally different role. For example, banks and financial institutions do not re-invest debt and working capital is a huge part of their Balance Sheets - so you wouldn't use a DCF for such companies.

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