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Not OP but.. There’s a difference between debts and assets though. Is the $160B debt equivalent to $160B in assets or did they screw up and overspend? If I boug
by nomoreplease 5y ago
Not OP but.. There’s a difference between debts and assets though. Is the $160B debt equivalent to $160B in assets or did they screw up and overspend? If I bought a $500k for $1M then the next buyer can’t get it appraised for such
- lotsofpulp 5y agoEspecially if the house is theoretical, like Rivian’s products.
- vmladenov 5y agoHow are they theoretical? One literally drove past my house the other day when I was walking my dog. I found the headlights pretty amusing.
- lotsofpulp 5y agoUntil it is sold and in the hands of objective parties, I assume it is theoretical.
- amcaskill 5y agoThe amount owed to the creditors doesn’t change in that scenario. The screw up (assuming the market recognizes it) would destroy value for the equity holders. Another way to think about total enterprise value is that there are two groups of people who have a claim on the business: the equity holders and the creditors. In order to own the business free and clear, you need to buy both of their claims. The total equity claim is the market cap and the total creditor claim is the outstanding debt.