Discounted cash flow and Discounting: Difference between pages

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(DCF).  
1. ''Discounted cash flow (DCF).''


A process of discounting cash flows that are expected in the future to make them comparable in value with cash flows received today.
In the context of DCF analysis, discounting is the process of calculating present values for expected future cash flows.




This process is widely used in investment appraisal, where the rate used to discount with is a measure of the appropriately risk adjusted cost of capital.
2. ''Trade finance.''


Where the sum of discounted future positive cash flows (inflows) is calculated, this is often referred to as the total ''Present value'' of those cash flows.
In trade finance, discounting techniques allow suppliers to receive earlier payment, but for smaller amounts than the full face value of the related invoices or bills of exchange.


Where the present value of future expected cash flows is netted against discounted investment outflows, this is referred to as the ''Net present value'' of the investment proposal.


3.


Discounted cash flow techniques include Net Present Value (NPV) analysis and Internal Rate of Return (IRR) analysis.
More broadly, any deduction from the full or usual price of something.
 
For example in retail.




== See also ==
== See also ==
* [[Bill discounting]]
* [[Discount house]]
* [[Discount rate]]
* [[Discount rate]]
* [[Incremental cash flows]]
* [[Discounted cash flow]]
* [[Internal rate of return]]
* [[Internal rate of return]]
* [[Investment appraisal]]
* [[Invoice discounting]]
* [[Net present value]]
* [[Net present value]]
* [[Present value]]
* [[Time value of money]]




===Other links===
===Other links===
[http://www.treasurers.org/node/8445 Masterclass; Discounted cash flow, The Treasurer, October 2012]
[http://www.treasurers.org/node/8445 Masterclass: Discounted cash flow, ''Will Spinney'', The Treasurer]


[[Category:Corporate_finance]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]
[[Category:Trade_finance]]

Revision as of 13:31, 3 March 2019

1. Discounted cash flow (DCF).

In the context of DCF analysis, discounting is the process of calculating present values for expected future cash flows.


2. Trade finance.

In trade finance, discounting techniques allow suppliers to receive earlier payment, but for smaller amounts than the full face value of the related invoices or bills of exchange.


3.

More broadly, any deduction from the full or usual price of something.

For example in retail.


See also


Other links

Masterclass: Discounted cash flow, Will Spinney, The Treasurer

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