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Research on Cash Flow Volatility and Earnings Stability and Enterprise Value Based on the Listed Companies of Shanghai and Shenzhen Stock Markets

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DOI: 10.25236/busem.2017.37


Xiao Meiling

Corresponding Author

Xiao Meiling


In the evaluation of enterprise value, free cash flow model is more and more widely used because of its unique advantages. However, in previous studies, the valuation of enterprise value by free cash flow model was based on the previous data of the existing enterprises, and did not predict the future value of the enterprise. Based on this, in this study, the grey prediction model has been introduced into the process of enterprise value evaluation, and the comprehensive value evaluation of the enterprise has been obtained through the prediction of the free cash flow. In order to verify the feasibility of the method, with the Shanghai and Shenzhen A shares of a listed company as an example, according to the W company's annual report over the years, the company's market value is estimated. The estimation results show that the method is basically consistent with the stock price in the same year, which verifies the reliability of the method. Using the method of free cash flow volatility under different corporate value is estimated, the estimated results show that, the volatility of free cash flow have a certain impact on the valuation of the company, and the volatility and the negative correlation between the valuation of the company.


Free cash flow, enterprise value, grey prediction, volatility, negative correlation.