Replies to post #1700 on Freeport-McMoRan (FCX)

[eddy2]

As interest rates rise it will put pressure on commodity prices to fall.

We have taken a small break but would like to discuss more on the topic of shareholders deficit as well treasury stock.

Treasury stock represents a credit. But more importantly it tells us the enterprise value of the company along with its counter part share holders deficit.

Let me explain this. When borrowed capital is introduced the capital is not taxed so it is owed back minus eighteen percent of the depreciated capital spent.

The difference with the selling of debt “ equity “ is the tax has been prepaid by the buyer of the debt equity.

This again is noted as a credit of twenty percent of the capital depreciation.

The debt never leaves the books it only gets transferred. The borrowed bank debt still exceeds the debt sold because of the tax bill attached.

Five times your capital tax owed is the amount of bank debt owing. Five times the equity tax credit is the debt owing to shareholders minus the results of adding the tax debt and credit together. Remember when doing so that your credit is negative and the deficit will be a positive when adding the two.

Now go back and take your total liability and subtract from it the equity stake.

Then take the remaining including the additional received earnings credit owed and subtract your assets.

You want to leave the recievables in place except if there is a tax credit cause we can assume the government is good for it. Remember tax’s owed on capital borrowed has already been removed in the process mentioned above.

The other risk associated is your market risk. Unless you can bring awareness to other investors on how the numbers work chances are the market won’t give a red cent for capital spent that wasn’t spent wisely.


Rule of thumb for me depending if there is a legit revenue stream after the deduction of the retained revenue from and before your EBIDA that is EAEBIDA ( earnings after equity and before interest, depreciation, amortization. I will not purchase a equity position unless the market cap equals EAEBDIA or lower.