Accounting with Beer Goggles On

(4 Aug 2015) I realized when I got a few comments back on my tables published earlier here that EV/EBITDA is a sensitive calculation. The calculations embedded were offered as part of Jon's piece (and later the first few of mine I believe) but it is worthwhile asking. What are the inputs?

EV is usually defined to be EV = MarketCap + Net Debt + Pref Shares + Minority Interest.

People are willing to say it is OK for PER to be 'high' because, well, it is a beer company and they have minority interests and such. The REAL way to look at a beer company is EV/EBITDA.

Why?

And pre-supposing the answer is "Because", one could ask "How?"

And the answer is, well, a couple of ways... [ed: there goes Accounting 101]

In this piece I look at two ways of calculating EV based off the numbers in the Circular of July 8 (which is appended to the piece here, or available on the HKEx website or your favorite data service).

The question is does it matter? My answer is - if you are suitably prepared, no. But to some people it probably should.

More below the fold.