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Doric Co (Q1) December 2010

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August 10, 2018 at 5:11 pm #467280
Ng
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Sir, Q1 part (ii) FCFF is 316.30. I do not understand why we calculate the value of equity as a remainder of 256.30 (316.3-60). Why is the value of equity not as per the balance sheet after restructuring which is 310?
Please help me clear my doubts. Thanks a lot.
August 11, 2018 at 8:50 am #467319
John Moffat
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As you should know from my lectures, discounting the free cash flow to the firm at the WACC gives the total value of the business – debt plus equity.
The value of equity in the SOFP is the book value and has no relation to the market value.
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