1/ what is the sustainable level of debt? 2/ What course of action do you recomm
ID: 462765 • Letter: 1
Question
1/ what is the sustainable level of debt?
2/ What course of action do you recommend?
Six Flags Income Statement 2007 2006 2005 2004 2003 Revenue 972,780 945,665 956,757 879,586 883,089 Operating Expenses 757,617 736,248 666,832 613,648 592,555 Depreciation & Amortization 138,787 132,295 127,658 125,374 119,715 Loss on Fixed Assets 43,062 27,057 13,906 11,676 -301 Income from Operations 33,314 50,065 148,361 128,888 171,120 Other Expenses Interest Expense 199,022 199,991 183,547 191,563 213,565 Minority Interest in Earnings 39,684 40,223 39,794 37,686 35,997 Other Expenses 12,367 948 19,303 37,731 27,592 Net loss on debt extinguishment 20,122 11,560 10,877 14,356 626 Taxable Income -237,881 -202,657 -105,160 -152,448 -106,660 Income Tax Expense 6,203 4,318 3,705 24,442 -34,660 Net Income before discontinued operations -244,084 -206,975 -108,865 -176,890 -72,000 Discontinued Operations -9,075 -97,605 -2,073 -287,919 10,287 Cumulative Effect of a change in accounting principle -1,038 Net Income -253,159 -304,580 -111,976 -464,809 -61,713Explanation / Answer
The sustainable level of Debt are as follows:
The sustainable debt till liquidation is $ [ asstet total 36,92,160 + 9,673 = 37,01,833 less debt 30,81,935 less shareholders equity - 252,620 = 6,19,898. The projection upto 2013 is negative so, the sales of asset at the end of 2009 will equate $6,19.898 , i.e the maximum sustainable debt and sales amount asset will make up the debt.
The best couse of action to sold the business at any price equal or above $ 6,19.898
Bal,sheet particulars 2007 2008 2009 -11 Remarks Cash & Cash Eqivalent 28,388 9673 long term debt payment deducted from cash 7equivalent Total Assets 39,45,319 3692160 net loss deducted from asset , ie, to be disposed . Long term Debt 2,239,073 total Debt 2257,788 3081935 Preferred stock repayment, & int , pref dividend added as no cash available. redeemable minority interest - preferred stock 285,623 - Stockholders equity -252,620Related Questions
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