(7) Regularly discuss your tangible assets
with your circle of advisors.
For example, if a mining service company wanted to purchase a competitor, a suitable financing structure might give value to the machinery and equipment being acquired, but also recognize the value of the target company in excess of its tangible assets
. In a situation such as this, the 'goodwill' could be quantified on the balance sheet, but a are alive lender would find a way to recognize this without strapping working capital that might be needed to fund integration and growth.
By applying this rate extraction technique to a set of comparable sales, the appraiser formulates a reliable set of tangible asset
capitalization rates that can be employed in the HUD valuation.
It is well-established that the value of any enterprise rests upon the net current value of its tangible assets
and its ability (or lack thereof) to generate excess earnings (I prefer the term "residual profit"), over and above fair compensation to any owner-employee(s) for work performed, and over and above a fair return on the current value of such tangible assets
Assume the practice has no material investment in tangible assets
and the appropriate capitalization rate for a physician's practice is 20% (reflecting the value of the practice is primarily goodwill).
* The industry average pro-tax return on the book value of net tangible assets
is 13 per cent, while that of Lolly Co is 16 per cent.
Here's why: 1) Cashflow lending can maximise the debt capacity of the business As we are not restricted to the lending against the tangible assets
of the business there is the potential to leverage more debt than conventional lending; 2) It levels the playing field for service companies Thousands of SMEs are servicesfocused, with little or no tangible assets
Under this restatement, IFRS 16 impact to opening balance on 1 January 2018 amounted to EUR44.0m in tangible assets
, EUR0.4m in deferred tax asset, EUR45.9m in interest-bearing liabilities and a negative EUR1.5m in retained earnings.
Shareholders' equity to assets and tangible common equity to tangible assets
ended the quarter at 10.33% and 8.84%, respectively