Valuation Techniques: DCF vs. Multiples Comparison PPT

This PPT slide, part of the 81-slide How to Prepare a Business Plan PowerPoint presentation, presents 2 distinct valuation methodologies: Discounted Cash Flow (DCF) and valuation by multiples, both expressed in EUR thousands.

On the left side, the DCF method outlines projected free cash flows over 5 years, starting with negative values in the initial years, indicating upfront investments or losses. The cash flows gradually improve, culminating in a significant continuing value of 11,000 in year five. The discount rates decrease from 65% in year one to 25% in years 4 and five, reflecting a diminishing risk perception over time. The discount factors, derived from these rates, are used to calculate the present value of future cash flows, resulting in a total entity value of 2,500 after accounting for debt.

The right side illustrates the valuation with multiples approach, focusing on the profit for the relevant period in year five. It shows a profit of 905, which is multiplied by a factor of 43, yielding a valuation of 38,900. The slide also incorporates a discount factor based on an internal rate of return (IRR) of 65% for 5 years, leading to a total value of 3,190.

This slide effectively contrasts 2 valuation techniques, highlighting their methodologies and resulting values. It provides a clear framework for understanding how different approaches can yield varying valuations, which is crucial for decision-making in investment or acquisition scenarios. The visual representation aids in grasping the complexities of financial valuation, making it a valuable resource for executives considering strategic financial assessments.

This slide is part of the How to Prepare a Business Plan PowerPoint presentation.

Download the Full Presentation

EXPLORE MORE SLIDES FROM THIS PRESENTATION

EXPLORE MORE PRESENTATIONS ON

Entrepreneurship Business Plan Development

Are you familiar with Flevy? We are you shortcut to immediate value.

Flevy provides business best practices—the same as those produced by top-tier consulting firms and used by Fortune 100 companies. Our best practice business frameworks, financial models, and templates are of the same caliber as those produced by top-tier management consulting firms, like McKinsey, BCG, Bain, Deloitte, and Accenture. Most were developed by seasoned executives and consultants with 20+ years of experience.

Trusted by over 10,000+ Client Organizations

Since 2012, we have provided best practices to over 10,000 businesses and organizations of all sizes, from startups and small businesses to the Fortune 100, in over 130 countries.

Flevy is the world's largest knowledge base of best practices.

Leverage the Experience of Experts.

Find documents of the same caliber as those used by top-tier consulting firms, like McKinsey, BCG, Bain, Deloitte, Accenture.

Download Immediately and Use.

Our PowerPoint presentations, Excel workbooks, and Word documents are completely customizable, including rebrandable.

Save Time, Effort, and Money.

Save yourself and your employees countless hours. Use that time to work on more value-added and fulfilling activities.

Read Customer Testimonials

"As an Independent Management Consultant, I find Flevy to add great value as a source of best practices, templates and information on new trends. Flevy has matured and the quality and quantity of the library is excellent. Lastly the price charged is reasonable, creating a win-win value for

... [read more]

– Jim Schoen, Principal at FRC Group

"If you are looking for great resources to save time with your business presentations, Flevy is truly a value-added resource. Flevy has done all the work for you and we will continue to utilize Flevy as a source to extract up-to-date information and data for our virtual and onsite presentations!"

– Debbi Saffo, President at The NiKhar Group

"Last Sunday morning, I was diligently working on an important presentation for a client and found myself in need of additional content and suitable templates for various types of graphics. Flevy.com proved to be a treasure trove for both content and design at a reasonable price, considering the time I

... [read more]

– M. E., Chief Commercial Officer, International Logistics Service Provider

"My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me

... [read more]

– Bill Branson, Founder at Strategic Business Architects

"As a consulting firm, we had been creating subject matter training materials for our people and found the excellent materials on Flevy, which saved us 100's of hours of re-creating what already exists on the Flevy materials we purchased."

– Michael Evans, Managing Director at Newport LLC

"Flevy is our 'go to' resource for management material, at an affordable cost. The Flevy library is comprehensive and the content deep, and typically provides a great foundation for us to further develop and tailor our own service offer."

– Chris McCann, Founder at Resilient.World

"[Flevy] produces some great work that has been/continues to be of immense help not only to myself, but as I seek to provide professional services to my clients, it gives me a large "tool box" of resources that are critical to provide them with the quality of service and outcomes they are expecting."

– Royston Knowles, Executive with 50+ Years of Board Level Experience

"I am extremely grateful for the proactiveness and eagerness to help and I would gladly recommend the Flevy team if you are looking for data and toolkits to help you work through business solutions."

– Trevor Booth, Partner, Fast Forward Consulting