Activision Blizzard Capital Structure. WACC or APV
Good morning,
I am at the moment trying to value Activision Blizzard. I did some research with regards to which method I should use to value the company, either WACC (DCF) or APV. In my studies, I found that WACC should be used if the firm keeps a relatively constant capital structure or if the firm targets a specific capital structure in the future. I have some questions:
1 - How much is "relatively constant"? Activision has been changing its D/E ratio lately (Q4 2015-0,5; Q1 2016-0,7; Q2 2016-0,59; Q3 2016-0,72; Q4 2016-0,54) but I am not sure if that change is enough for the use of APV. Also note that the values I provide represents Book Values and from what I have read the "constant capital structure" should be in market values.
2 - How do I know which capital structure a company wants to achieve in the future? Is it stated in the SEC Fillings?I have read some books and sometimes it is assumed that the target capital structure will be the same as the capital structure of the closest peers even though that might not be true.
Thank you very much for your time.
Regards, Nate
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