medium · Corporate Credit Analysis cca-core
A consumer goods firm has $1,800 million in reported debt. Footnotes reveal a $500 million receivables securitization facility that is currently fully utilized.
What is the analyst's adjusted debt figure and the rationale for this adjustment?
- $1,300 million; securitization reduces the overall debt burden by selling off assets.
- $1,800 million; securitization is a true sale and does not constitute debt for a credit analyst.
- $2,300 million; the adjustment is necessary to account for the interest rate differential between bonds and trade finance.
- $2,300 million; the adjustment restores comparability with firms using bank debt to fund working capital.
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