What is the primary focus of DCF analysis?

The primary focus of DCF (Discounted Cash Flow) analysis is to determine the present value of future cash flows. This method involves estimating the cash flows a business or project is expected to generate in the future and then discounting these cash flows back to their present value using a specific rate, often reflecting the cost of capital or required rate of return.

By doing this, DCF analysis helps investors and analysts understand the intrinsic value of an investment, taking into account both the time value of money and the anticipated growth of cash flows. This approach is widely used because it provides a comprehensive framework for valuing an opportunity based on its ability to generate wealth over time, rather than focusing solely on historical performance or market share.

Other options mentioned, such as assessing market share, evaluating short-term project profitability, or analyzing past financial performance, address different aspects of financial analysis but do not capture the core purpose of DCF, which is centered on future cash flow projections and their present valuation.