# Discounted Cash Flow (DCF)

*Corporate Finance & M&A — Finicade finance glossary*

A DCF values a business as the present value of the cash it will generate, discounted at a rate reflecting its risk. It's the most theoretically correct valuation method and the most sensitive to assumptions: shifting the discount rate or growth rate by one percentage point can move the answer by 30% or more. A DCF is best read as a test of what you must believe to justify a price, not as an oracle.

**Also known as:** DCF, discounted cash flow analysis, DCF model

**Related terms:** [NPV (Net Present Value)](https://finicade.com/glossary/npv), [WACC](https://finicade.com/glossary/wacc), [Terminal Value](https://finicade.com/glossary/terminal-value), [Free Cash Flow](https://finicade.com/glossary/free-cash-flow), [Equity Valuation](https://finicade.com/glossary/equity-valuation)

Source: https://finicade.com/glossary/dcf