Net Debt
Hi, in the process of calculating net debt, one guide I'm using says to '...subtract cash and other non-operating assets such as equity investments'.
What do you think the guide here means by 'equity investments'? Short-run investments? I don't think it's non-controlling interest since this was already covered elsewhere.
I think these 'equity investments' are part of cash and cash equivalents.
Net debt = financial debt - C&CE - ST investments
In the EV-equity bridge, other non operating assets such as the equity investments will need to be deduced from equity to arrive EV and can be labelled as other adjustments in the bridge
Hope this helps
Could be two things, but I assume it’s the latter
i) per post above, equity stakes in JVs & Associates need to be deducted from EV calculation as the corresponding earnings are not captured in your EBIT(DA). It’s basically the inverse of what you’re doing for NCI, where the company owns a majority and hence fully consolidated 100% of earnings of the subsidiary, but does not “own” / is entitled to all of it, hence the EV needs to reflect the value attributable to the external shareholders / minority holders.
ii) judging from the way you phrased your question, it could refer to short-term investments into eg stocks, treasury bonds , hedging instruments etc (doesn’t need to be equity) that have a clearly identified current market value and are highly liquid. Those can be easily sold and turned into cash, hence should be part of the Cash & Cash Equivalents bucket.
Have a look into the breakdown of the full C&CE position reported on the balance sheet, and screen the Current Assets for things like “short-term investments” and the like. If there are relevant items outside of C&CE, you can adjust the C&CE for those items as incremental cash.
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