Hi there and thank you in advance!!!
I want to know how much of leverage a specific company can have. Ok I have 3 strategies:
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Look for industry comps and look for the amount of CFO/total debt, EBITDA/Total debt, net debt/EBITDA, etc and have and insight from that view, take the median of the comps
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Look for covenants of the company and look if they have a maximum amount of debt they can take
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Look in the statements for insight about the maximum net debt/ebitda, etc, they could are willing to have
Problem?
This company has no debt side it’s CFO it’s crazy strong, so no covenants; the company doesnt mention a maximum amout they are willing to take, so and on monday (till I have bloomberg) I can do number 1.
Please shed a light dear CFA Chartholders/candidates of things you would do other than number 1.
For further information:
This is a mexican cement and concrete company (Cementos Moctezuma); so I dont have many mexican comps, but I will take other international cement companies.
This problem is for the final round of an investment banking intern vacancy, so they want to know how much the company could take debt to make strategic investments and so on
Thank you very very much