New study reveals shocking differences in calculating cash flows for valuation.
The article compares different ways of calculating cash flows for valuing a company. Some methods include non-cash items from the Balance Sheet, while others focus only on actual cash movements. The researchers found that there is a wide range of interpretations on what should be considered as cash flows, leading to significant differences in valuation results. This confusion among experts and practitioners can contradict fundamental concepts of cash flow and the time value of money.