“ Think of it this way. In a Discounted Cash Flow (DCF) model, you are calculating the net present value of future cash flows as an estimate of the value of the business. The implicit assumption is that $1 of cash flow is worth $1 before adjusting for the time value of money. However, if you have a management team that habitually destroys capital with “strategic” acquisitions, then perhaps $1 of cash flow should be worth far less. ”