طريقة القيمة الحالية للتدفقات النقدية المستقبلية في تقيم الشركات (دراسة تطبيقية على الشركات المدرجة في سوق فلسطين للأوراق المالية)
The Discounted Cash Flow Approach to Corporate Valuation Empirical Evidence on the Companies Listed in Al Quds index
شادي عزام شاكر ملحم
Shadi Azzam Shaker Milhem
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Many companies in the Palestine Exchange (PEX) do not disclose enough information about the risks they are exposed to. The goal of this research is to introduce the reader to the companies‟ valuation techniques using Discounted Cash Flow, often referred to as “DCF”, in order to calculate the companies' values based on the disclosed financial information related to the Palestinian firms listed in PEX. This study compares the results concluded using this method with other valuation methods. In this research, various corporate valuation theories are discussed, and selected corporate valuation techniques are applied for the valuation of companies listed in PEX. The corporate valuation theories being applied in this research are; the Discounted Cash Flow .(DCF) model, the Dividend Discount Model (DDM) and the Residual Income Model (RIM) In addition to using one method for determining the expected rate of return on a company‟s stock, i.e. the capital asset pricing model (CAPM). Based on the corporate valuation analysis made, the DCF model is selected as the primary corporate valuation model in this thesis, and the Capital Asset Pricing Model (CAPM) is chosen to estimate the cost of equity for the company. Finally, the analysis using graphs and sensitivity analysis and scenarios is conducted in order to evaluate whether the results obtained are reasonable and to show the divergence between the output values. The companies values using the Discounted Cash Flow (DCF) model are calculated based on the forecasted Free Cash Flow (FCF) in the explicit forecasting period (the horizon period) and the estimated continuing value after the explicit forecast period (after horizon period). The study results are compared with equity values of the companies listed in PEX, .Table 9 shows that.The DCF model shows whether the company‟s value is understated or overstated as well asthe differences between the equity spot value and actual value using the DCF when it is nearthe actual value. In most cases, the model shows that the company‟s Fair Market Value FMV) is always overstated over its calculated intrinsic value using DCF. The difference between the DCF and the other methods is that DCF is the most reliable method in all conditions, e.g. in the cases of undeclared dividends the DCF will not affect the company‟s evaluation. Adding to that, when DCF is used to evaluate companies facing losses the value of the stock will not be a negative value. The DDM is not a reliable evaluation model in the case of no dividends, for examples GMC, TNP, UCI and WATANYIA are all companies which did not declare any dividends during the year 2013. However, if the companies do not declare dividends it does not mean that the value of the companies is Zero. Accordingly, the value of the companies using DDM in the case of no dividends will be zero, which seems to be unreasonable. Furthermore, evaluation of the companies that are facing losses using the RIM will show negative values of the companies. The equity values obtained from the DCF, DDM and RIM are compared with those published in PEX. These differences in these values are likely to be due to undisclosed information and demand and supply factors.