FIG (Banks & Insurance)
Why are capex and working capital effectively undefined concepts for a bank?
Model answer
For an industrial, capex and working capital capture the investment needed to support operations, sitting apart from financing. For a bank, the 'investment' that drives future earnings is originating…
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More from FIG (Banks & Insurance)
- Why is EV/EBITDA a meaningless multiple for a bank?
- Why does a standard unlevered DCF fail when you point it at a bank?
- Why do bankers value financial institutions on equity value only, never enterprise value?
- What does it mean when people say 'debt is raw material, not capital structure' for a bank?
- Why is interest expense an operating item for a bank when it's a financing item everywhere else?
- If revenue and EBITDA are out, what P&L lines do FIG analysts actually anchor on for a bank?
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