Economic Profit question, total, capital

PieMan

Noplat-$ cost of caital.

Dumb question, how do you find total capital? Assets? Equity? Assets + Depreciation?

F$*%!

defour44

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.

kickthatcfa

canadiananalyst Wrote:
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> Oops


haha, u r all the way in Alt Invst my friend.

ayodayo

This is getting IMPOSSIBLE by each passing minute.

firat

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.

SpyAli

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

YAhmed

total capital vs total capitalization.

same thing or different?

tianxin

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.

xilige

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!

BelalM

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.