Thesis on Discount rate and DCF analysis


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Hi everyone,
I have to do the thesis for the Master of Science in law and business administration although I have a Master of Art in Banking and Finance and my great interest in financial markets and in business evaluation.

So, the idea on which my thesis would be based is a deep practicing analysis of the flows analysis (both income flow and cash flow analysis) and mainly an analysis of the discount rates used in the practice and the formula and input behind them.
I would appreciate your help and contribution because my experience is limited and based on book, an overall knowledge of financial market and stock analysis and my four years experience as apprentice in a professional firm of certified accountant (a sort of business lawyer specialized in the economic field) who makes business valuation for SME.

In my experience I saw that in many cases the input choices for obtaining the discount rate are somewhat arbitrary and so my thesis question it is whether is consistent the use of market data, as book tell, or other way are used for choose the input (in my experience, based on Italy, in the tailoring of the discount rate, I start from the long term risk free rate, but when I have to add the market premium, I not use the market data because the return of the market has been too volatile in the past years, wich means that in some years I could use low discount rate despite the economic crisis and the low profitability of business, which for me doesn't make sense because I think that the risk of a business doesn't coincide only with the E/P of a business but with other factors that maybe advanced method of analysis could take in account.

What is your idea about and your behavior when you face the need of choose the discount rate e the input in its formula?
Thank you and sorry for my bad english.
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