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Finale inventory builds6/1/2023 ![]() Some years – This is a bit tricky, while longer the duration, the better it is.If a company is young and belongs to the high growth sector, then probably a little under 20% is justified, but no company deserves an FCF growth rate of over 20% Companies can barely sustain growing their free cash flow beyond 20%. FCF (Free Cash Flow) growth rate – The rate at which you grow the FCF year on year has to be around 20%.Some guidelines for the conservative assumptions are – ![]() Having stated the above, the only way to overcome the drawbacks of the DCF Model is by being as conservative as possible while making the assumptions. The DCF model may also make you miss out on unusual opportunities as the model is based on certain rigid parameters.
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