Discounted Cash Flow

A way to value a business or project by estimating the cash it will produce in future and reducing those amounts to what they are worth in today's money.

DCF forces you to be explicit about future cash and risk, which is the backbone of how investors and acquirers put a number on a business.

You forecast five years of profit, shrink each year to today's value, add them up, and that total is your DCF valuation.