Up or Down ??, page-49

I understand re the debt

But when valuing the equity you need to take into account the net debt on the balance sheet. If company A and company B have exactly same revenue, operating profit and operational characteristics but A has no debt and B has loads, then the value of the equity will be much greater in A, because B has to service the debt thereby reducing annual net profit and pay it back therefore can’t retain surpluses like A. Plus, perceived risk in having a large debt load raises the risk premium required to hold it.

talking of a p/rod 1 is totally misleading. Market cap is $180m but debt is capital employed in business and has to be paid off, and that is 400m plus. Add the respective capital employed positions of 9 and 7 and divide by the appropriate NET profit and you getter a comparable multiple