Wednesday, August 19, 2015 2:11:41 PM
Post# of 17106
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Posted On: 08/19/2015 1:11:25 PM
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Posted By: Striving
Re: mopusmaximus #17088
"In fact, some of you number crunching geniuses answer this: Which is more valuable: A company with a number of outstanding shares and no debt, or a company with fewer shares but mucho debt? I think Benster or Choov or someone post the debt /equity ratio of airlines in general:
From Investopedia:The average long-term debt/equity ratio of companies in the major airlines industry is 104.89, which indicates that for every $1 of shareholders' equity, the average company in the industry has $104.89 in total liabilities. Since the major airline industry is highly capital-intensive, companies in this industry tend to have high debt/equity ratios.
So which scenario is more valuable?
Striving at all times to take it to the next level!!"
Which scenario is better? It depends. In my eyes, the dilution is technically considered debt. They won't be able to move on after certification with 6,000,000,000+ shares. They will eventually need to buy back some shares. That means they'll need to invest money into buying their shares and removing them from the market. So how much money will they need to invest to lower dilution should be taken into account. The only way to know which would be best is to know the exact numbers, which is impossible. If a company has 6 billion shares, it'll take $20,000,000 + to buy enough back to make a difference. LT has 770+ million shares alone. That's over $4 million. $20,000,000 would currently remove about 4 billion shares. That would help a bit, but we'd probably need $30,000,000. When PPS increases, so will that number. So if they had less than a billion shares with $30,000,000 in debt, it's basically like a push.
Post# of 17106
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Posted On: 08/19/2015 1:11:25 PM
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Posted By: Striving
Re: mopusmaximus #17088
"In fact, some of you number crunching geniuses answer this: Which is more valuable: A company with a number of outstanding shares and no debt, or a company with fewer shares but mucho debt? I think Benster or Choov or someone post the debt /equity ratio of airlines in general:
From Investopedia:The average long-term debt/equity ratio of companies in the major airlines industry is 104.89, which indicates that for every $1 of shareholders' equity, the average company in the industry has $104.89 in total liabilities. Since the major airline industry is highly capital-intensive, companies in this industry tend to have high debt/equity ratios.
So which scenario is more valuable?
Striving at all times to take it to the next level!!"
Which scenario is better? It depends. In my eyes, the dilution is technically considered debt. They won't be able to move on after certification with 6,000,000,000+ shares. They will eventually need to buy back some shares. That means they'll need to invest money into buying their shares and removing them from the market. So how much money will they need to invest to lower dilution should be taken into account. The only way to know which would be best is to know the exact numbers, which is impossible. If a company has 6 billion shares, it'll take $20,000,000 + to buy enough back to make a difference. LT has 770+ million shares alone. That's over $4 million. $20,000,000 would currently remove about 4 billion shares. That would help a bit, but we'd probably need $30,000,000. When PPS increases, so will that number. So if they had less than a billion shares with $30,000,000 in debt, it's basically like a push.
