asset sales to reduce leverage, page-6

copper,

"If one single asset is sold for just 1 dollar below book value then gearing ratio increases it's as simple as that."

here is an attempt to refute that
feel free to argue (constructivley) with me, then we can all learn.

i have a box of crayons that is worth $10
in order to get them i had to borrow $5
that gives a LVR of 50%

lets say the market is flooded with crayons and my crayons book value is now worth only $8
and now have a LVR of 62%

so now i sell 62% of my crayons
my LVR (gearing) is now zero

so you can see that as assets were sold (in this case all of them) and gearing was gearing reduced to zero
depending on how many crayons i sold, my gearing would have been reduced somewhere between 62% and zero


aside from that i agree with you that as a fair punt that the property market could bounce (for no particular fundamental reason; rather based on the nature of human psychology) and in that vague light (sorry, i don't believe in inevitable) that the assets would be better off retained at this point in time