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Financial Times Guide to Corporate Valuation, The, 2nd Edition
book

Financial Times Guide to Corporate Valuation, The, 2nd Edition

by David Frykman, Jakob Tolleryd
September 2012
Intermediate to advanced content levelIntermediate to advanced
216 pages
5h 59m
English
FT Publishing International
Content preview from Financial Times Guide to Corporate Valuation, The, 2nd Edition
138 The Financial Times Guide to Corporate Valuation
The debt can thus maximally exceed the equity by 10.5 times within the
limits of the ‘investment grade’ definition. This, however, is an extreme
case and would represent a too great financial risk exposure given the
inherent risk in the operations.
So, given the four different levels of debt/equity ratios, we will use a target
debt/equity ratio of 0.42 since:
It gives the company the financing it needs – not more, not less.
It is in line with management’s operational risk assessment.
It provides for sufficient interest coverage.
It appears reasonable compared to the industry’s debt/equity ...
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Publisher Resources

ISBN: 9780273729112