Quick simple offer value question
Hi, I'm a bit confused on the following matter: Let's say company X has $50 market value equity and $50 net debt so firm value is $100. Let's say I want to buy company X 100% with no premium (for this example). Am I actually paying $50 for the equity, or $100 for the firm? And to whom am I act... Hi,

I'm a bit confused on the following matter:

Let's say company X has $50 market value equity and $50 net debt so firm value is $100. Let's say I want to buy company X 100% with no premium (for this example). Am I actually paying $50 for the equity, or $100 for the firm? And to whom am I actually paying for the debt and equity to - if company X were public or private?

I guess I'm just a bit confused because equity denotes ownership but since debt also financed the firm, does this mean I'm buying the debt as well - or how does this exactly work?

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Just a follow up with same above example:

Suppose Company X has $50 total market value of equity and they have 100 shares so price/share is $0.50. If I make a tender offer of $0.75/share for 51 shares, would I be correct in saying that I gain control of the entire company now? But what would happen to the $50 of debt - if I buy the debt, would this be equal to paying off all the principal and thus there would be no more interest?

But in the case that the tender offer succeeds and I don't "buy" the debt, would this mean that I control the company and own 51% of it, but I still have debt outstanding and must continue to pay the interest expenses?

I realize this is a basic question, but I wanted to be clarified.

Thanks Read More

Minority Interest To the CF
Hello,

Can I please ask why we did not add back the Minority Interest to the Net Income on the CF on the advanced Core Model ? We added only depreciation to the Net Income ,but not the other non-cash items other than depreciation. Can you please advis ?

Thanks
Eylem

Quick cost of debt question
Hi, In the finance 101 vid, you mention that the cost of debt, in theory, is the incremental marginal borrowing rate - the more one borrows, the higher the risk and thus rate. But we must use the current yield to maturity as the next best answer because the marginal rate is impossible to predict.... Hi,

In the finance 101 vid, you mention that the cost of debt, in theory, is the incremental marginal borrowing rate - the more one borrows, the higher the risk and thus rate. But we must use the current yield to maturity as the next best answer because the marginal rate is impossible to predict.

This might sound dumb, but the YTM for which instrument are we using? And I thought that the cost of debt was a function of the YTM _and_ the credit ratings for the company? How exactly does this work and how do we as analysts find this number? Read More

Quick SGA question from basic accretion/dilution model
Hi, Some time ago I posted this question in the basic accretion dilution model. [quote:1sxzkh33]Hi, This might be a dumb question: Why are we using the 2005E for EPS, PE, and net income but SGA from 2004A? Posted: 10/8/2008 9:13:27 PM ========== Not a dumb question! You are calculating acc... Hi,

Some time ago I posted this question in the basic accretion dilution model.

[quote:1sxzkh33]Hi,

This might be a dumb question:
Why are we using the 2005E for EPS, PE, and net income but SGA from 2004A?
Posted: 10/8/2008 9:13:27 PM

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Not a dumb question! You are calculating accretion/dilution for 2005E and part of that includes synergies which we estimate using 2004A, the last known year of SG&A.
Posted: 10/8/2008 10:16:20 PM

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I'm guessing this is because no estimate for SGA is provided?[/quote:1sxzkh33]

Again, why are there estimates for the EPS, PE, and NI, but none for SGA? Read More

How to Analyze a 10K: about the pension section
Hi, the instructor said there is a section that talks about the pension, I want to know where is it?

thanks