RE:RE:RE:RE:Net Debt Calculation
BlueCollar51 wrote:2) Accounting mumbo jumbo: Your explanation about it being accounting mumbo jumbo does not make sense to me. While accounting rules may sometimes seem convoluted, they are explicit and they always make sense when you do the math. I do not see the math in how the balance sheet amount of convertible debt is calculated. If anybody can help me understand that point it would be much appreciated
Read more at https://www.stockhouse.com/companies/bullboard/t.cus/canexus-corporation#QhchxG6CjlXmSZGV.99
If you want to understand the math used to value the Converts on the balance all you have to do is GOOGLE
“Jump-Diffusion convertible pricing model” and you will get results like these;
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2273296
https://www.tandfonline.com/doi/abs/10.1080/14697688.2014.935464#.VQER5OG0dWw
Good Luck and Have Fun !! It looks like “Mumbo Jumbo” and a guaranteed headache to me !!
Blue: I do not think this method is used to value the Converts on the balance sheet: "The Series IV, V and VI Convertible Debentures are considered to be Level 2 financial instruments not carried at fair value. Their fair values as noted in the table above were determined using their closing price on the TSX at September 30, 2014, less the fair value of their embedded conversion option derivatives. At September 30, 2014, the fair values of the embedded conversion option derivatives of the Series IV, V and VI Convertible Debentures were $0.9 million, $5 million and $14.9 million, respectively, which were determined using a Jump-Diffusion convertible pricing model.
That clearly says they are NOT carried at fair value. It goes on to say how the fair values are calculated using the particular pricing model. In the reportt, the tables just above this quote show the various carrying and fair values. But this does not help me understand how they are stated on the balance sheet (Recall the Converts are listed on the balance sheet at $287 million).
Do you read the quotation from the report differently?