What is a key feature of a DCF valuation?

A key feature of a Discounted Cash Flow (DCF) valuation is that it considers cash flows during the entire period of analysis. In a DCF model, the valuation is derived from projecting the future cash flows that a business is expected to generate, which typically spans several years. These cash flows are then discounted back to their present value using a discount rate, reflecting the time value of money. This approach allows for a comprehensive understanding of a company's potential financial performance, rather than focusing on a single metric or point in time.

The correct answer emphasizes the holistic view of financial performance, where both short-term and long-term cash flows are critically analyzed. By factoring in the entire duration of cash flows, a DCF valuation can better capture the growth potential and economic realities of the business.

In contrast, the other options neglect this comprehensive approach: one suggests a narrow focus on terminal value only, another implies dependency solely on market comparables without considering a company's specific cash flow abilities, and the last option resorts to a metric that does not adequately account for future cash generation.