G'day WangChung.
Completely wrong huh ? ;)
I'm using asset book value not net book value as liabilties have no ownership stake in the business.
Really though what makes the share price go up is Earnings Per Share (EPS)
AS long as earnings stays constant then fewer shares over the same earnings means a higher EPS.
You are right in saying that debt doesn't change in quantiy but it does increase percentage wise in terms of the finance for the company. I think I mistyped 50 = 20 +20 before, that should have been 50 =30 +20.
Debt has everything to do with it. A company that holds debt will be more profitable than a company that does not simply because the interest payments on the debt are a tax deduction. For a given capitalisation a company with no debt has to pay more tax and therefore is less profitable.
We will just have to agree to disagree.
Ryan
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G'day WangChung.Completely wrong huh ? ;)I'm using asset book...
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