Most Common Errors When Valuing a Business

18 Pages Posted: 26 May 2011 Last revised: 31 May 2011

Date Written: May 24, 2011


The objective of this paper is to present the common errors in the valuation process to estimate the intrinsic value of a company/asset. The discounting cash flow (DCF) approach is considered to be the most accurate (theoretically), flexible and widely used method. It is for that reason that most analysts prefer to use it for valuing a company/asset. In this paper, we will give attention to some conceptual errors when applying the DCF approach.

Keywords: errors, discounting, Cash flow, fair price, WACC, CAPM ,DCF, Intrinsic, IRR, MIRR, problems, approach, size, equity, capital, debt

Suggested Citation

Marafie, Faisal Abbas, Most Common Errors When Valuing a Business (May 24, 2011). Available at SSRN: or

Faisal Abbas Marafie (Contact Author)

Independent ( email )

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