why is noplat/ invested capital overstated? (topic valution in emerging markets, nominal forecasts for financial ratios)
bc invested capital is understated, they define IC as including PPE which in an inflationary environment is understated
how do you know that they define that by including PPE? therefore denominator too small, that’s why overstated…!
in the CFAI texts they calc IC = Net PPE + NWCapital,
thanks mate! 