When discerning the book value of debt for WACC, do you look at the book value of ALL liabilities including current liabilities, or do you just look at the book value of Long-Term Liabilities.
Thanks in advance for anybody willing to help.
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you generally want the market value, but book value serves as a decent proxy for the market value (for debt only, not equity)
in my experience, when finding the value of the debt, look at anything that is debt...long term or short term. don't include all liabilities since you want to exclude accounts receivable etc
Im assuming you mean accounts payable?
I was under the impression you focus on long-term debt and ignore all current liabilities.
From my experience (classroom & projects) exclude all current liabilities
Current portion of debt is either your service of that debt (making interest or coupon payments) or redeeming/repaying some amount of principal (which could be for a litany of reasons: desire to de-leverage, PIK note, some sort of covenant stipulation). That said including current portion of debt doesn't make much sense seeing as it won't be part of total debt the proceeding fiscal quarter.
Current portion of debt is the total repayment liability over the forward twelve months, not quarter. You include all interest-bearing liabilities in the total debt -- alex has got it right above me.
usually includes all interest bearing liabilities...
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