Comments

  1. avatar says

    hi there
    can someone explaine me why other non cash items(in year 2006) amounted to 20 m have NOT been added back to capital employed. My logic is that the opening balance of capital employed in year 2007 is 506(book value)+16(lease in 2006)+20(non cash items in 2006) = 542! not 522
    thanks in advance!

  2. avatar says

    can someone explain to me why balance sheet value for 2007 he use 506 but when 2006, he use 350? if the logic is to use the open value, isnt that 2007 balance sheet value should be 400 + 16 m capitalise lease instead of 506 + 16 m? pls help!! thanks a lot

    • Avatar of John Moffat says

      @meesammeesam, There is an argument for using the current capital structure (although market values – never balance sheet values).
      However, the logic is that we really need the cost of future capital (not the existing – the existing capital is already invested whether good or bad) and that is why the gearing that they are aiming for is more sensible. (Also, that example was ‘stolen’ from an examiners article and he used 70:30)

    • Avatar of admin says

      lectures work ok, your problem relates most likely to firewall, your home/office or internet provider firewall,
      please contact your internet provider to look into this

  3. Avatar of adotey says

    Great lecture!. Love it.
    I however, have one question that is bordering me.
    why do we use the target capital structure and not the actual/current capital structure of the entity.
    Thanks.

  4. avatar says

    Amazing, thank you very much for such a great lecture on EVA! I had tried learning the ‘tricks’ but didnt know the whole idea behind it and this lecture has just made it all clear to me!

    Anyone knows whats the name of the lecturer?

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