The Dividend Discount Model (DDM): The Black Sheep of Valuation?
Mergers and Inquisitions
MAY 3, 2023
Step 3: Project the Changing Cash and Debt Balances and the Net Interest Expense If the company needs extra funds to maintain its Cash balance, you can assume it issues Debt; if it has excess Distributable Cash Flow, you can assume it retains the Cash. In our forecast, Cash rises too much, and Debt / EBITDA goes from 5.0x
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