tag:blogger.com,1999:blog-8152901575140311047.post7436761797696010729..comments2024-03-28T12:49:46.624-04:00Comments on Musings on Markets: Governments and Value II: Subsidies and ValueAswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-8152901575140311047.post-78485667744136780762016-12-21T15:20:43.657-05:002016-12-21T15:20:43.657-05:00Sir,
Thank you for sharing your analysis on topic...Sir,<br /><br />Thank you for sharing your analysis on topics that are otherwise little or not commented at all.<br /><br />I have a question regarding the treatment of non-repayable government grants, particularly for acquisition of fixed assets), which for accounting purpose are recognised as deferred income on the balance sheet and through income in instalments in the P&L over the useful life of the assets (in a way that it matches the relevant depreciation expenses) is transferred to equity.<br /><br />I agree with your observation that grants should be treated as a source of funding at 0% cost as no income streams will be going out to this claim. However at the same time this source of capital resembles equity, as it is not repayable and bears the same risk as equity capital (or at least it has certain opportunity costs). In addition companies that receive such type of grants are able to take additional debt, as banks see it as an increase of equity. The annual income portions are non-cash, so the FCF would not be affected directly (although indirectly the investments should increase revenues, efficiencies, etc.). Put this way what do you think would be the most appropriate treatment of the grant as the source of capital for WACC calculation? <br /><br />It goes without saying that depending on the treatment of the grant as a source of funding (equity, quasi-equity or an interest-free debt), return ratios and multiples would need to be adjusted as well, as both the profit measures and the capital base would be affected. What do you think would be the appropriate adjustments on the accounting income measures (as they are increased by annual income portion of the funding)?<br /><br />Thank you!Anonymoushttps://www.blogger.com/profile/03672470298114233035noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-47834354358619547112013-09-04T12:57:25.394-04:002013-09-04T12:57:25.394-04:00Dear Damodaran,
perhaps it is about time that you...Dear Damodaran,<br /><br />perhaps it is about time that you do a special post on the valuation on Tesla - the price is now 176.... most likely an extremely overvalued business based on your previous comments! Thanks for your great site and insights, HalliAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-51292835608706714112013-08-26T03:52:36.366-04:002013-08-26T03:52:36.366-04:00Impressive content. I have study most of them and ...Impressive content. I have study most of them and got a lot from them. Your way with terms is elegant, stimulative,and relatively attractive. so keep it up.Business Loanshttp://www.onlinecheck.com/business_loans.htmnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-55200280253740240882012-12-29T00:42:48.203-05:002012-12-29T00:42:48.203-05:00The involvment by government never seems to work o...The involvment by government never seems to work out.QUALITY STOCKS UNDER FIVE DOLLARShttp://www.manta.com/c/mxcpkb3/the-manhattan-calumet-value-stock-hotlinenoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-18961905274485005812012-05-03T17:17:20.221-04:002012-05-03T17:17:20.221-04:00Hi Prof. Damodaran,
Rather unrelated question for...Hi Prof. Damodaran,<br /><br />Rather unrelated question for you, do u take the Corporate Finance and Valution courses for part-time MBA students at Stern? If not, would you consider taking it in the future?<br /><br />Best Wishes,<br /><br />IshfaqIshfaqhttps://www.blogger.com/profile/14196459677368603727noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-62126208551178024392012-04-27T15:32:53.718-04:002012-04-27T15:32:53.718-04:00Great Article! I also enjoyed your Wiley presentat...Great Article! I also enjoyed your Wiley presentation today. Do you have a valuation of FSLR?Saurav Roychoudhuryhttps://www.blogger.com/profile/15717543692051491723noreply@blogger.com