标题: Corp: AP and EV [打印本页] 作者: parott 时间: 2011-7-13 13:32 标题: Corp: AP and EV
when use EV to derive the value of equity, why need to add back cash and investment, and substract long term debt only? Why Notes payable and AP not count as part of the debt?
when use FCFF to get the value of equity, why need to substract AP? Thanks.作者: President1988 时间: 2011-7-13 13:32
Not sure im following you.....EV (enterprise value) = Value of Equity + Value Pref Equity + Value Debt - Cash and equivalents - investments.....
FCFF gives you total value of a company. If you want to find the equity value but you used FCFF, you need to subtract the market value of debt, not accounts payable. That will give you the value of equity.作者: tobeornottobe 时间: 2011-7-13 13:32
one of the question in mock exam, it use FCFF to get the total value of the firm, then deduct AP, notes payable , long term debt to get the value of equity. ......
is that right? Thanks.
Spanishesk Wrote:
-------------------------------------------------------
> Not sure im following you.....EV (enterprise
> value) = Value of Equity + Value Pref Equity +
> Value Debt - Cash and equivalents -
> investments.....
>
> FCFF gives you total value of a company. If you
> want to find the equity value but you used FCFF,
> you need to subtract the market value of debt, not
> accounts payable. That will give you the value of
> equity.作者: ap0258 时间: 2011-7-13 13:32
adding up all those = market value of debt. What they are doing is exactly what Spanishesk said:
Equity Value = FCFF - market value of debt作者: firat 时间: 2011-7-13 13:32
in your formula, which kind of investment it is? like investment in bond/equity etc? Thanks.
are they treated as non-operating assets? Thanks.
Spanishesk Wrote:
-------------------------------------------------------
> Not sure im following you.....EV (enterprise
> value) = Value of Equity + Value Pref Equity +
> Value Debt - Cash and equivalents -
> investments.....
>
> FCFF gives you total value of a company. If you
> want to find the equity value but you used FCFF,
> you need to subtract the market value of debt, not
> accounts payable. That will give you the value of
> equity.
