BA 3340 Lecture Notes - Lecture 99: Deferred Tax, Exchange Rate, 0 (Year)
Document Summary
The higher the amount of opera0ng liabili0es the less a 4rm needs to borrow to 4nance its ac0vi0es. All liabili0es where the 4rm charges a fee for the right to borrow the money. Companies normally have more interest bearing debt than 4nancial assets. Invested capital may either be regarded as net opera0ng assets or funds used to 4nance opera0ons, which is the sum of equity and net interest-bearing debt. Know the company and its industry (in order to know what is opera0onal and 4nancial ac0vi0es) Do the balance sheet before the income statement. Mark the 4nancial items (e. g. cash and cash equivalents). The rest (the interest free) will be opera0ng liabili0es o (liabili0es can either be included in invested capital (if not interest bearing, opera0ng liabili0es) or in net interest-bearing debt (if interest-bearing, 4nancial liabili0es) Found by taking all assets and deduc0ng 4nancial assets and opera0ng liabili0es! Financial liabili0es are added to equity and 4nancial assets are deducted from liabili0es!
