The phenomenon of discounted cash flow techniques as part of business valuation introduces a whole new way of running the corporate numbers. With lots of financial projections more or less dictated by known market values, new technology is helping business leaders re-think the values of their assets.

There are several different ways to go about using discounted cash flows valuation, and managers wanting to distinguish between these functions can get informed on key terminology, news, definitions and more with free online resources teaching the public about discounted cash flow models and techniques. Businesses can benefit from the educational resources in:

1. Learning about discounted cash flow in regards to tax valuation and how to incorporate annual events into the books for use with discounted cash flow tables or models.

2. Using discounted cash flow technique to see what the "real ROI" might be on a project when the books are closed months or years in the future.

3. Integrating discounted cash flows into the periodic financial analysis that goes on in board rooms and in offices.

Action Steps
The best contacts and resources to help you get it done

Find resources on discounted cash flows 'cash flows to equity' valuations

The cash flow to equity model is one way of using discounted cash flows to chart the future of a business. This approach tends to focus on issues of liquidity and is separate from other 'entity-approach' models.

I recommend: Get free cash flow to equity models and other DCF business valuation online from Mr. Swing, a trading and valuation site with a lot of informative pages. The Social Science Research Network hosts pages on more about this kind of valuation.

Look for resources on weighted average cost of capital approach for discounted cash flows

The weighted average cost of capital approach essentially calculates how much a company must pay to maintain its assets. This can be a complex process for companies with multiple assets and a high degree of asset itemization.

I recommend: Get details on weighted average cost of capital approach at the website of Value Based Management. Find more on WACC and weighted returns services at Brand Finance.

Find info on adjusted present value (APV) and similar discounted cash flows techniques

Adjusted present value uses tax shields and other factors to calculate a Net Present Value (NPV). APV is another variable method of rating corporate assets and project values by balancing costs and projected revenues.

I recommend: Get info on APV and related terms at the Financial Library online. For more information on APV and similar kinds of discounted cash flow analysis, check out Trade Tax Free: "Where the Smart Money Goes."

Tips & Tactics

Helpful advice for making the most of this Guide

• •  When looking at the various discounted cash flow techniques available, try to keep in mind the specific ways that each approach will shed light on your own particular assets in terms of the time-line you want to illustrate. Learn about all of the business valuation models available and select the one that best fits your needs.

A discounted cash flow analysis incorporates the time value of money concept in order to find the net present value of a planned project, asset or investment. For business owners looking to make capital or financial investments or begin a new project, discounted cash flow tables illustrate whether or not these activities will be profitable over time. To understand discounted cash flow valuation, you must first understand the time value of money concept.

The time value of money concept is simply taking future cash flows and discounting them to their present value (PV). An easy way to remember this concept is this: One dollar today buys you more than one dollar will ten years from today. Here is how the financials represented in discounted cash flow models are key in helping business owners determine which capital or financial investment is more profitable:

1. Discounted cash flow tables allows the investor to see if the investment will return positive or negative future cash flows over the life of the investment.

2. A positive net present value (NPV) of potential future discounted cash flows represents a relatively good investment.

3. A negative net present value of potential future discounted cash flows represents a potentially poor investment or at the very least, a riskier investment.

Action Steps
The best contacts and resources to help you get it done

Get the discounted rate by calculating the present value (PV) of future cash flows

To get a fairly accurate discounted rate, the formula is as follows: Interest rate divided by (1 + interest rate). So, if the interest rate is 10 percent, then the equation is .10/(1+.10)=.0909.

I recommend: Use the calculators offered at Free Online Calculators and Paul Lutus to determine discounted cash flows interest rates.

Compare multiple investments via discounted cash flow tables

When making a decision between multiple investments, you need to determine which one is the most beneficial. There are many software programs available that allow you to compare multiple investments using discounted cash flow techniques.

I recommend: Wheatworks Software and Blue Chillies both offer discounted cash flows calculators that allow you to input multiple investment scenarios.

Determine the weighted average cost of capital (WACC) in the DCF analysis in order to assess risk

Use the WACC in discounted cash flow analysis as a means of valuing a company by comparing its debt to its equity. This number gives you a minimum return rate of your capital or financial investment in order for it to be profitable.

I recommend: Use the WACC calculators at Free-Logistics for simple calculations or purchase WACC software at QArchive for more in depth WACC calculations.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  The biggest shortcoming of relying solely on discounted cash flow models is when the assumption inputs go into perpetuity. The longer the time assumption inputs into a discounted cash flow calculator, the less accurate the outputs. It's always best to put a definitive time line on these assumptions to get a more accurate analysis.

DCF or discounted cash flows involves calculating the value of something in time; for example, estimates. It's great for valuing business investments, but as a tool, it's only as good as those who wield it. Experts will tell you that there is often a breakdown between short-term, reliable discounted cash flow models and longer term discounted cash flow projections that can be inaccurate and confusing.

For getting on the right side of this potentially complex valuation methodology, put your staff in good hands by enrolling them in business valuation training options that will pay off when their education saves the company money in the future. Business leaders can find solutions for discounted cash flows training online, including:

1. On-site training options where professionals will hold court in your venue on discounted cash flow analysis and more.

2. Online discounted cash flows training where modular or remote solutions empower staffers cheaply and on their own schedules.

3. Specialized discounted cash flows training like camps, conferences, workshops or seminars.

Action Steps
The best contacts and resources to help you get it done

Find 'real time' training solutions for discounted cash flows

For some, the only right way is to handle discounted cash flows training by bringing in real live professionals for a 'huddle,' where staff be quickly trained in the best and most accurate ways of business valuations. Lots of managers swear there's no substitute for hands-on learning, especially when it comes to skills that get used often.

I recommend: On-site budgeting training courses from K Alliance will have an experienced instructor in your work place to answer questions about the accuracy and reliability of a discounted cash flow technique and other budgeting tricks. The Educational Program Innovations Center also offers on site courses like PET026: Discounted Cash Flows Analysis of Oil and Gas Investment Opportunities, and other on-site training for using DCF business valuation.

Find online discounted cash flows training options

If your staff don't have time to schedule a huddle session, they can learn at their own pace with business valuation training courses offered online or electronically. Some of the top schools for financial training offer these kinds of products over the web for convenient enrollment.

I recommend: The New York Institute of Finance, a respected NY-based agency, delivers online business valuation courses dealing with discounted cash flow techniques as an accounting method. Wall Street Prep also offers premium online solutions for getting staff savvy in discounted cash flow tables, tools and concepts.

Find specialized seminars, workshops or one-time events for discounted cash flows training

Other sites can get you pointed toward intensive events for learning about discounted cash flows and business valuation. Use detailed site pages to find out how much these kinds of accounting tools will be covered to see if the offering is a fit for your staff.

I recommend: Seminars like this "Finance and Accounting for Non-Financial Managers" from Baker Communications present opportunities for one-time immersion in the principles of DCF and other valuation methodologies. Get access to workshop agendas online from Data Partner to peruse more options.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Don't let training for discounted cash flows (DCF) replace your own initiative in leading a team. Allow others to learn, but always follow your own best practices if you are at the helm. Supplement the training afterward with your own short session to make sure all team members are on the same page.