Suppose EV=200; no prefs or minority. Net Debt is 400. How much is Equity? If Equity is 0, what's going on here? How many cents on the dollar is this debt trading?
Can anyone walk thru the correct way to think about this?
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Seems like capital leases is the missing ingredient...
EV is generally equal to the following:
EV = equity value + Net Debt + Other stuff
Where:
Other stuff = Preferred stock + Capital Leases + Noncontrolling interest
So if equity = 0, then:
200 = 0 + 400 + Other stuff
You said no preferred stock or minority interest, so capital leases would need to be -200.
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