FCFE = NI - (1 - debt ratio) (Cap Ex - Dep) - (1 - debt ratio) (investment in working capital)
What debt ratio do you use if you are given 2 different values?
For instance, homie company will finance 40% of cap ex and working capital with debt financing......the company is currently financed with 30% debt and has a target debt ratio of 30%.
For the formula, do you use 30 or 40%? |