DCF: Useful, But Not Always the Right Tool
Article Abstract:
Ten specific points of capital budgeting procedures are listed. Cash flow techniques or investment appraisal are only a small part of this procedure. Two discounted cash flow (DCF) techniques that are the most popular are net present value (NPV) and internal rate of return (IRR). These DCF techniques, though widely acclaimed, are avoided. In the United States, only 163 of the Fortune 500 use this method; in Great Britain, even fewer do. Criticism abounds concerning the method itself. Interest rates are far from stable, though the model is based on a known interest rate and time period. Risk and marketability are ignored in the decision process. DCF techniques involve forecasts of long-term cashflows. Obviously, the method is not perfect, but neither are the traditional ones. Some methods can overcome weaknesses in DCF techniques including 1) a measurement of probability to assess marketability and risk, 2) some type of time limit to minimize long-term risks, and 3) the likelihood of erratic earnings could be reduced by introducing an earnings growth restraint.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 1984
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Travelling right
Article Abstract:
Issues are presented concerning the importance of planning in order to facilitate safe and effective international travel. Flights, accommodation, security, linguistic barriers, visa applications and communicating are discussed.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 2001
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The right stuff
Article Abstract:
The personal qualities needed to be a chief executive officer are discussed, with focus on the need to be self-aware and confident, have the ability to inspire others and be sincere.
Publication Name: Accountancy
Subject: Business
ISSN: 0001-4664
Year: 2000
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