CECL Methodology Overview – Discounted Cash Flow
Introduction to Discounted Cash Flow analysis and application for estimating expected credit losses
Institutions are discovering Discounted Cash Flow modeling to be an effective method of measurement for a variety of reasons, namely when historical loan data is insufficient and/or application toward longer-term assets. This paper covers the basics of this measurement methodology, a high-level discussion on the inputs and assumptions used to perform the calculation, and the benefits and challenges of its deployment.
- CECL overview
- DCF inputs and assumptions
- Benefits and challenges of deploying a DCF analysis
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