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Concordia Healthcare Corp. T.CXR.R



TSX:CXR.R - Post by User

Comment by Scruggstyleon Feb 04, 2016 3:13pm
117 Views
Post# 24525372

RE:I disagree

RE:I disagree
You are wrong. The 15X is called the "Multiplier". Mathematically, it is equal to 1 divided by the capitalization rate used in the capitalized earnings approach to valuing equity. The capitalization rate is equal to the Weighted Average Cost of Capital (WACC). As long as the cost of debt (interest rate) is less than the cost of equity (unlevered rate of return demanded by shareholders) then adding debt will reduce the WACC and increase the Multiplier.
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