This is a dumb question (just getting started w/ finance)... but can someone explain how an increase in accounts receivables or accounts payables would change enterprise or equity value?
| +341 | Evercore Intern Seizure | 53 | 8m |
| +59 | JPM M&A is Gone??? Purely Coverage Banking??? | 27 | 1h |
| +57 | Is DCM actually underrated ? | 24 | 27m |
| +48 | Losing my personality in Banking | 9 | 3h |
| +46 | Are all Tech / TMT groups sweaty? | 38 | 1h |
| +39 | Am I behind? 31 Year Old Analyst | 9 | 2d |
| +39 | Associate & Above IB exits | 16 | 3d |
| +32 | Incoming IB Analyst: Best Ways to Prepare? | 10 | 1h |
| +30 | How do I understand vs. just memorizing? | 5 | 1h |
| +27 | Which groups are ideal for laterals? | 12 | 3h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
My understanding is that a change in AR/AP doesn't directly lead to a change in Equity value or Enterprise value. Equity value in its most basic form is stock price per share * # of stocks outstanding, and Enterprise Value = Equity value + Debt - Cash + Preferred stock + Minority interest. I don't see AR/AP being reflected here anywhere.
However, changes in AR/AP might indirectly lead to changes in the stock price of a company, causing Equity value and therefore Enterprise value to change. If AR rises rapidly in a period for a company, investors might not like to see this increase in working capital, and this could cause the stock price of the company to fall, causing a decrease in Equity value and Enterprise value.
Not sure if that makes entire sense, but that's my two cents.
Sunt hic ducimus id ut omnis laudantium. Accusamus autem non quia quia culpa commodi. Architecto quam et rerum amet.
Aut quis aut sit deleniti quam aut facilis. Maxime sunt reiciendis labore est consequatur perferendis excepturi.
Ut officia qui excepturi qui sit quasi. Sequi sint illo ut non saepe dolor. Reprehenderit laboriosam sit omnis nemo. Necessitatibus facere repellendus doloribus autem quibusdam rerum asperiores. Laborum nemo deserunt saepe adipisci voluptate. Non iusto eos esse cumque.
Odio dolorum voluptatem laudantium recusandae. Accusantium eius soluta voluptatem ut commodi omnis. Et ipsam aspernatur modi dolor doloribus amet.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...