Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)

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Methods and examples of company valuation: Using DDM and FCFF to value a company

Authors
Zhuo Chen1, *
1University of Wisconsin Madison, Madison, WI, USA
*Corresponding author. Email: zchen962@wisc.com
Corresponding Author
Zhuo Chen
Available Online 24 February 2025.
DOI
10.2991/978-94-6463-652-9_37How to use a DOI?
Keywords
DDM; business valuation; investment suggestion; CyebrAgent
Abstract

This paper explores the application of the Dividend Discount Model (DDM) and Free Cash Flow to the Firm (FCFF) in valuing companies, particularly focusing on CyberAgent Inc., a leading digital media and Internet group in Japan. The analysis demonstrates how DDM, with its emphasis on dividend payouts, serves as a reliable tool for evaluating companies with stable dividend histories, providing a straightforward method for estimating intrinsic value based on future dividends. In contrast, FCFF offers a comprehensive valuation framework that considers all cash flows available to capital providers, making it particularly useful for growth companies that reinvest earnings rather than distribute dividends. The paper concludes the business valuation methods by emphasizing the importance of selecting the appropriate valuation model based on the specific characteristics of the company, highlighting how both DDM and FCFF contribute to wisely investment decisions and deeper insights into a company’s financial position and future prospects.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
24 February 2025
ISBN
978-94-6463-652-9
ISSN
2352-5428
DOI
10.2991/978-94-6463-652-9_37How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Zhuo Chen
PY  - 2025
DA  - 2025/02/24
TI  - Methods and examples of company valuation: Using DDM and FCFF to value a company
BT  - Proceedings of the International Workshop on Navigating the Digital Business Frontier for Sustainable Financial Innovation (ICDEBA 2024)
PB  - Atlantis Press
SP  - 362
EP  - 368
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-652-9_37
DO  - 10.2991/978-94-6463-652-9_37
ID  - Chen2025
ER  -