Glossary

With over 200 terms in both English and French, our M&A Dictionary is designed to help you better understand the key words and concepts related to the sale oe purchase of a business in Canada.

« Back to Glossary Index

Present Value

« Back to Glossary Index

Category: Business Valuation

Definition:

The current worth of a future stream of cash flows, considering the time value of money. The time value of money is the concept that a specific amount of money today is worth more than the same amount in the future due to its potential earning capacity and the impact of inflation. Business valuations often involve estimating the future cash flows that a business is expected to generate. These cash flows are then discounted back to their present value using a discount rate. The discount rate reflects the risk associated with the investment and the opportunity cost of investing money elsewhere.