Estimating and measuring a company's cash flows is an integral part of the valuation process. According to Professor of Finance at the Stern School of Business at New York University, Aswath Damodaran, there are three main steps in cash flow estimation all investors and analysts have to consider when computing this integral component of valuation.
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Calculating company cash flows
The first stage is to estimate the current earnings of the firm and cash flow attributable either to all stakeholders or just equity investors.
According to Professor Damodaran's presentation on the topic, there are three primary methods analysts can use to measure cash flow attributable to...
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