PROBLEMS OF USING THE METHOD OF DISCOUNTED CASH FLOWS FOR EVALUATING THE CAPITAL COST OF JOINT-STOCK COMPANIES

Abstract

The article outlines the theoretical aspects of using the discounted cash flow method to evaluate the capital cost of a joint-stock company with special emphasis on the use of the relative income method used in developed countries. In particular, based on the data of the joint-stock company «Qvartz» for the period from 2015 to 2018, the market value, book value and dividends of joint-stock companies were analysed, and the market value of the capital calculated. In addition, the study provides an analysis of multiplier ratios that are widely used in the world in evaluating the investment attractiveness of joint-stock companies. This, in turn, reflects a fundamental analysis in assessing the cost of capital of a joint-stock company. The study identifies the existing problems in using the discounted cash flow method in evaluating a joint-stock company and develops scientific proposals and practical recommendations for their solution.