statement wholesale jewelry china DDM (DIVIDEND DISCOUNT MODEL) and FCF (FRE CASH Flow Model) which are more popular with analysts?

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2 thoughts on “statement wholesale jewelry china DDM (DIVIDEND DISCOUNT MODEL) and FCF (FRE CASH Flow Model) which are more popular with analysts?”

  1. Ramona

    wholesale jewelry companies in texas DDM (DIVIDEND DISCOUNT MODEL) and FCF (FRE CASH Flow Model), among which DDM (DividEnd Discount Model) is also loved by analysts.

    DIVIDEND DISCOUNT MODEL, referred to as DDM, is one of the most basic internal value evaluation models of the stock. Williams (Williams) proposed the dividend discount model (DDM) of the company's (stock) value assessment in 1938, which laid the theoretical foundation for quantitative analysis of virtual capital, assets and corporate value. It also provided a strong strong analysis of securities investment. The theoretical basis.

    The principle:
    The internal value refers to the value that the stock itself should have, not its market price. The internal value of the stock can be evaluated with the current value of the current dividend income of the stock; dividend is the return of the shareholders who issue the stock company to issue the stock company, and the profit distribution according to the shareholders' shareholding ratio. Dividends of stocks. The basis for this evaluation method is that if you always hold this stock (such as you are the owner of this company, you must always hold the company’s stock), then the discounted value of your dividend from the company year by year is the stock. value. The method of evaluating stocks based on this idea is called dividend discount model.

    free cash flow is generated by the enterprise, which meets the remaining cash flow after meeting the need for re -investment. The maximum amount. To put it simply, Free Cash Flow (FCF) refers to the difference between Capital expenditure (CE) generated by cash flow generated by enterprise operating activities. That is: FCF = CFO-CE. Free cash flow is a financial method that is used to measure the cash of the company's actual holding. Refers to the maximum existing amount that can be distributed to shareholders (and creditors) on the premise that the company's survival and development.

    free cash flow considers capital expenditure and dividend expenditure on the basis of business cash flow. Although you may think that dividend expenditures are not necessary, this expenditure is expected by shareholders and is paid in cash. Free cash flow is equal to business activities.

  2. Gina

    indonesia wholesale jewelry You are doing research. Since the two methods coexist, there must be advantages and disadvantages. You must be clear.
    The dividend discount model is more suitable for mature enterprises, stable performance, stable dividends, easy prediction, high reliability;
    free cash flow model is suitable for high -speed growth enterprises. But the development speed is rapid and the cash flow continues to increase. The defect is that the forecast of future cash flow is difficult to accurately measure, and the current growth rate may be difficult to continue.
    Therefore, comparison from the stability of the model, more analysts tend to divide the model. But it is obviously not suitable for companies in high -speed growth. Therefore, it should be combined and applied flexibly.

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