Valuation and DCF

What a business is fundamentally worth.

The deepest way to value a business is to estimate the cash it will generate in the future and discount it back to today's value, because a rupee next year is worth less than a rupee now. This is discounted cash flow (DCF). The idea: a company is worth the sum of all its future cash, adjusted for time and risk. Higher expected cash and lower risk mean a higher value. DCF is powerful but only as good as its assumptions. Small changes in growth or discount rate swing the answer a lot. Treat it as a disciplined estimate, not a precise truth. Values the business on fundamentals Forces explicit assumptions Independent of market mood Very sensitive to inputs Hard for erratic businesses False precision is a real trap

Part of Learn NEPSE Investing, a free course on reading Nepali company accounts and charts. Section: Valuation.