Finance Gurus - help me decode this line from a news report...

[Saras]

Originally posted by JohnT
Saras...

Is that a common ratio? It's not something that one sees here much in the states, even in the Wall Street Journal. What's the purpose of such a valuation?

I'm also assuming that "net debt" is typically (not always, though) a negative number.

Thanks!

It's common enough in M&A and equity analyst reports. It's really useful as a sort of crude, quickie discounted cashflow valuation.

Net debt is usually a positive number - who in their right mind would keep deposits at say LIBID minus something when they could repay their debt which costs them LIBOR + something?

[JohnT]

Ahhh. :smack: That's what I get for analogizing this to, say, my credit card balance.

Wait... that smack smilie doesn't work here. Oh well...

[Kuciwalker]

There's : idiot :