{"ok":true,"canonical_url":"https://dealroom.so/glossary/discounted-cash-flow","api_url":"https://dealroom.so/api/public/glossary/discounted-cash-flow","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"discounted-cash-flow","term":"Discounted Cash Flow","group":"Reading the business","definition":"A valuation method that estimates the value of an investment based on its projected future cash flows, discounted back to their present value. It helps you understand what future earnings are worth today.","what_it_means":"While often used by sophisticated buyers or appraisers for complex businesses, DCF can be a powerful tool to complement other valuation methods like market multiples. It forces you to think critically about future performance and the risks associated with achieving those projections, directly impacting your business valuation.","url":"https://dealroom.so/glossary/discounted-cash-flow","official_sources":[],"related":[{"slug":"cash-flow","term":"Cash flow","url":"https://dealroom.so/glossary/cash-flow"},{"slug":"cash-flow-projection","term":"Cash flow projection","url":"https://dealroom.so/glossary/cash-flow-projection"},{"slug":"business-valuation","term":"Business valuation","url":"https://dealroom.so/glossary/business-valuation"},{"slug":"financial-forecast","term":"Financial Forecast","url":"https://dealroom.so/glossary/financial-forecast"}],"related_questions":[{"question":"Can future cash flow or profits from the acquired business count as equity injection?","url":"https://dealroom.so/for-lenders/questions/can-future-cash-flow-or-profits-from-the-acquired-business-count-as-equity-injection"},{"question":"How can an SBA 7(a) loan help with ongoing cash flow for my business?","url":"https://dealroom.so/sba-loans/basics/how-can-an-sba-7-a-loan-help-with-ongoing-cash-flow-for-my-business"},{"question":"What is the primary factor a lender considers when evaluating the cash flow from an acquired business?","url":"https://dealroom.so/sba-7a/questions/what-is-the-primary-factor-a-lender-considers-when-evaluating-the-cash-flow-from-an-acquir"},{"question":"Are there any restrictions on the use of cash flow projections for an SBA 7(a) acquisition loan?","url":"https://dealroom.so/sba-7a/questions/are-there-any-restrictions-on-the-use-of-cash-flow-projections-for-an-sba-7-a-acquisition-"},{"question":"Can I use an SBA 7(a) loan for my business's daily operating expenses or cash flow?","url":"https://dealroom.so/sba-loans/basics/can-i-use-an-sba-7-a-loan-for-my-business-s-daily-operating-expenses-or-cash-flow"},{"question":"How does a lender evaluate the reasonableness of a borrower's projections for future revenue and cash flow?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-evaluate-the-reasonableness-of-a-borrower-s-projections-for-future-reven"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Discounted Cash Flow","url":"https://dealroom.so/glossary/discounted-cash-flow","source_type":"DealRoom Data"}}