a beta is estimated based on the average beta among a group of similar public companies. Analysts may refine this beta by calculating it on an after-tax basis. The assumption is that a private firm's beta will become the same as the ...
Why is interest Expense and Depreciation added back, when calculating Free Cash Flow, if Free Cash Flow is supposed to represent the money that a business can give out to it's lenders and Owners, without the business being affected? Provide an example?
Additionally, the risk-free rate is an important input for calculating other important financial components, like the cost of equity, which determines the firm’s weighted average cost of capital (WACC) orTreynor’s Ratio. Also, it is a fundamental component of the Black-Scholes option pricing ...
Why is interest, expense ignored when computing return on net operating assets (RNOA)?Operating Assets:Any asset of the organization that helps in the daily operations is termed as their operating asset. Operating assets are also subject to depreciation for calculating how much...
Calculating levelised costs of energy Capital costs are the most important parameters in the case of the renewable-energy sources. For onshore wind, the minimum this year may be taken as $1,100/kW. This reflects the weighted average for India quoted in the Renewables 2018 Global Status Repor...
Why do taxes not matter when you are calculating the break-even EBIT for a company? Explain the cash conversion cycle (CCC) and net working capital. Why is this important to the contemporary executive? How do executive decisions regarding CCC and net working capital affect the c...
Firstly is the reduction in the value of the fair value of an asset like decrease in a company asset value especially if it is used and gets worn out and secondly, in the accounting records, the allocation of the original cost of the assets to the phases in which...
Explain why choosing the option with the highest NPV is not always the best. Discuss the importance of calculating the value of real options in finance: namely option to delay, option to expand, and option to abandon. Which of the following i...
Why do people prefer direct method instead of indirect method when calculating operating cash flow? Explain why cash flow statements are prepared and mention their uses. In analyzing the statement of cash flows, why is it important that it be segmented...
Explain how a firm might shift its capital structure so as to change its weighted average cost of capital (WACC). What would be the impact on the value of the firm? Explain why it is important for stock investors to understand correlations bet...