METHODS & TOOLS: Scenario Valuation Model
   
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The Discounted free Cash Flow method is a well known technique for valuation of companies and projects
When applied where applicable and where needed, it is very useful tool
We use our, software supported, DCF model for ranking business scenarios according to their value creation
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The DCF technique itself is straight forward but the quality of the result depends on the quality of the input
All disciplines in the company needs to be involved in order to ensure a realistic accurate and all embracing evaluation of the scenario impact
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  • •…close cooperation with the finance department to agree on an unambiguous financial baseline
  • …close cooperation with marketing and sales to ensure realistic forecasts
  • …close cooperation with production to estimate the impact of the decision on cost of sales
  • …etc…