In computing the optimal debt ratio for a company, we often rely on the most recent year’s financial statements.
While that does give you the most updated numbers for a company, the most recent year’s earnings may not be a good indicator for long term borrowing capacity, for cyclical or commodity companies or companies with one-time losses/profits. In this session, I look at ways of deciding the optimal, when you decide to look past just the last year’s earnings.
Slides: http://www.stern.nyu.edu/~adamodar/pd…
