The value of a business is its future cash flow

• The value of a business today is the sum of all the money it will make in the future.
• To properly value a business, you also have to discount those future cash flows to their present worth, since a given amount of money today is worth more than the same amount in the future.
• High-growth companies often lose money in their early years, but their value is based on the expectation of large future cash flows.
• Low-growth businesses, on the other hand, have most of their value tied to their near-term cash flows, which are vulnerable to competition.