easy · Corporate Credit Analysis
In Asset-Based Lending (ABL), how is the 'borrowing base' conceptually different from a simple LTV on the total asset book value?
- The borrowing base applies specific 'advance rates' only to eligible, liquid assets like receivables and inventory.
- The borrowing base is always calculated using the 'going-concern' EBITDA multiple.
- The borrowing base includes 'soft' assets like goodwill at their full book value.
- The borrowing base is a fixed amount that never changes over the life of the loan.
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