Calculation of Net Debt
Here is something I can't wrap my mind around - how come Accounts Payable, Other Short-term Liabilities and Long-term liabilities are not considered "debt" in arriving at the Net Debt amount?
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^ above are not interest-bearing
Explanation starts at 1:25
Also, accounts payable is already considered in the calculation of working capital requirement (present in both FCFf and FCFe).
I know all analysts have their way of doing it but tbh for me is short term + long term - cash. This because, in reality, all liabilities are not interest bearing and you do not refinance all your liabilities.
That is correct, "debt" is not always black and white. In practice (for example, in credit agreements) it is a defined term where you could in theory negotiate what is considered to be "debt" in a leverage calculation. There are of course certain things that are more black and white and likely less negotiable, but on the fringes there are certainly liabilities that may or may not be treated as debt. One example from my own experience is past-due accounts payable...in a deal I personally look at those obligations as debt even though general A/P is not.
This.
Another important example is the renegotiation of sales/income taxes depending on the country the company operates in.. those definately should be treated as debt accounts (both short and long-term).
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