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Module V· Consolidation Methods & Equity MethodAdvanced
Question

How can the equity method be misused as an off-balance-sheet debt vehicle, and how do you address it in valuation?

Answer

Equity-method accounting can hide investee debt from consolidated leverage. Use look-through debt and EBITDA when exposure is material.

Deep diveShow more details

Guarantees and funding commitments can turn 'off-balance-sheet' debt into real economic debt.

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