medium · Corporate Credit Analysis fsa
An analyst notices that a borrower's 'Adjusted EBITDA' includes a $15 million add-back for 'startup losses' in a new geographic segment.
Why might this be considered a credit-negative adjustment?
- It forces the firm to pay higher cash taxes on the adjusted amount
- It automatically triggers a 'Ratings Watch Negative' from the agencies
- It masks the true cash burn of an unproven expansion strategy
- It reduces the amount of 'Incremental' debt the firm can legally issue
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More Corporate Credit Analysis fsa practice
- What is the company's Funds From Operations (FFO)?
- If revenue is $500M, variable costs are 60% of revenue, and fixed costs are $100M, what is
- What is the company's Days Sales Outstanding (DSO)?
- What is the company's Free Operating Cash Flow (FOCF)?
- What is the company's Current Ratio?
- What is the most likely credit implication?
- What is its Free Operating Cash Flow (FOCF) conversion rate from EBITDA?
- Which firm exhibits higher quality of earnings?