To read this content please select one of the options below:

Valuing companies by cash flow discounting: ten methods and nine theories

Pablo Fernández (IESE Business School, University of Navarra, Madrid, Spain)

Managerial Finance

ISSN: 0307-4358

Article publication date: 2 October 2007




The aim of this paper is to answer the question: Do discounted cash flows valuation methods provide always the same value?


This paper is a summarized compendium of ten methods including: free cash flow; equity cash flow; capital cash flow; adjusted present value; business's risk‐adjusted free cash flow and equity cash flow; risk‐free rate‐adjusted free cash flow and equity cash flow; economic profit; and economic value added.


All ten methods always give the same value.

Research limitations/implications

The disagreements among the various theories of firm valuation arise from the calculation of the value of the tax shields (VTS). The paper analyses nine different theories.


The paper is an analysis of ten methods of company valuation using discounted cash flows and nine different theories about the VTS.



Fernández, P. (2007), "Valuing companies by cash flow discounting: ten methods and nine theories", Managerial Finance, Vol. 33 No. 11, pp. 853-876.



Emerald Group Publishing Limited

Copyright © 2007, Emerald Group Publishing Limited

Related articles