Hello everyone, I stumbled across the following problem while doing the mock case, it goes like this:
2012
current liabilities: 2783
long-term debt: 2249
2013
current liabilities: 2678
long-term debt: 2449
And in the answer key the NB is calculated as change in LTD 2240-2449= -200
And also in the same case later, the equity value of firm is calculated as Firm value - MV of debt, but the debt doesn’t include current liabilities, why?
I am having problem understanding this part, shouldn’t NB be the change in both LTD and ST ones? sorry for my lack of understanding if this looks a stupid question to you, thanks.