Discounted cash flow is very important measure in finance and especially in corporate finance. The thing is that value of money now aren't equal to value of the same amount money in the future. And it is a key for corporate financial calculations. Because all the project that are projected for the future would bring positive cash flow in the future, sometimes very long future and that is why that cash flow should be discounted.
Discounted means recalculated to the current value and discounted value will always be lower than the value of the future. Discounted cash flow is calculated as sum of every year discounted values. This is used in many financial methods, especially in DCF valuation, NPV calculated also related to IRR calculation. All those methods are based on discounted cash flows of the company.
Cash flow is determined as positive cash flow less negative cash flow, when positive cash flow comes from income of the company or the investment project, the negative cash flow is equal to expenses of company or mentioned investment project.
