In a bank valuation, the amount of current loan loss provision is not deducted from the DCF result. Why is it then important to analyze the adequacy of the bank’s current loan loss provisions?
Answer to relevant QuestionsWhat are some of the differences between the ways the equity and credit markets operate? Which type of business, a software company or an electric utility, would benefit more from improving ROIC than from increasing growth? Why? What are the potential reasons why TRS over short periods of time may not reflect the actual performance of a company and its management? Discuss why, within the broader health care sector, ROIC can be declining for health-care facility companies but increasing for health-care equipment companies. In the economic spread analysis, a tax penalty is allocated to a bank’s interest spread on loans but no tax credit is allocated to the interest spread on deposits. Why does that not violate the Modigliani and Miller ...
Post your question