Dumb question, how do you find total capital? Assets? Equity? Assets + Depreciation?
F$*%!作者: defour44 时间: 2011-7-13 15:30
total capital is equity plus debt
think of the wacc formula - it measures the cost of debt and the cost of equity so that's capital作者: President1988 时间: 2011-7-13 15:30
cost of capital=$WACC作者: mengxu 时间: 2011-7-13 15:30
also think in common sense, you wanna start a business, what do you use to start it?
borrowed money or investors money 作者: chandsingh 时间: 2011-7-13 15:30
I have only seen it based on beginning value of TA. This is not the same as equity + debt, but let us hope they don't get too picky.作者: tarunajwani 时间: 2011-7-13 15:30
Thanks all. I understand that completely, but where does the $200,000 from on #34 EOC Q. Reading 29...作者: redskins44 时间: 2011-7-13 15:30
Thanks Dreary, didn't see that post.作者: giants2010 时间: 2011-7-13 15:30
Do we use book value or fair value of debt+equity?
I think it's book value?作者: BelalM 时间: 2011-7-13 15:30
I think you would go with the method the company generally uses but if you're comparing between companies then you would need to adjust to make them comparable but in a simple question the economic profit of a company would just be based on how they recognize their assets.作者: xilige 时间: 2011-7-13 15:30
yeah this is the part where I hate everything.
Definitely in Corp Finance, Total Capital = Beginning Total Assets,
but I could not guarantee that its the same thing if you are in FRA. bump!作者: tianxin 时间: 2011-7-13 15:30
Ya it does because equity plus liabilities equals assets so it's the same in corporate finance and accounting. The only difference is the use the word debt instead of liabilities.作者: YAhmed 时间: 2011-7-13 15:30
total capital vs total capitalization.
same thing or different?作者: SpyAli 时间: 2011-7-13 15:30
Capitalization is the rate you used to discount a formula. It's called the capitalization rate. I don't know what total capitalization per se would be作者: firat 时间: 2011-7-13 15:30
two different concepts - Total Capital is the Book value of Equity and Debt. Times it by the WACC to get the dollar cost of capital. - Total Capitalization is a measure of Total Debt/Total Debt + Equity (there is also a Long Term Debt Capitalization ratio - Total capitalization includes short term debt). Basically capitalization is a measure of the firms ability to take on more debt. Lower = better.作者: ayodayo 时间: 2011-7-13 15:30
This is getting IMPOSSIBLE by each passing minute.作者: kickthatcfa 时间: 2011-7-13 15:30
haha, u r all the way in Alt Invst my friend.作者: defour44 时间: 2011-7-13 15:30
Haha, also there is a capitalization rate which is part of the Real Estate section. You were right with that. R-G implied through NOI/MV is also known as a capitalization rate.
