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.
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Discounted Future Earnings Method
« Back to Glossary IndexCategory: Business Valuation
The Discounted Future Earnings Method is one of the methods under the income approach applied by business valuators to estimate a firm’s worth based on earnings forecasts. The discounted future earnings method uses these forecasts for the earnings of a company and the company’s estimated terminal value at a future date, and then discounts these back to the present using an appropriate discount rate. The sum of the discounted future earnings and discounted terminal value equals the estimated value of the company.
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