Home » Blog » Deconstructing Gu Ming’s “debt ratio” is due to accounting measurement methods

Deconstructing Gu Ming’s “debt ratio” is due to accounting measurement methods

Deconstructing Gu Ming First of all, it nes to be made clear that the debt ratio will vary from industry to industry.

Companies with higher debt ratios are mostly those saint helena email list 100000 contact leads that are currently in a stage of rapid growth in

scale or expanding investment and financing, which has push up their debt ratios.

Therefore, relatively speaking, capitalintensive enterprises will have a higher debt ratio, such as

highend manufacturing industries including automobiles, consumer electronics, electrical appliances, etc.

Specifically, as of the end of the third quarter of 2024, Ford Motor’s debt ratio was 85%, General Motors’ was 74%, Airbus’ was 85%, Apple’s was 84%, Dell Technologies’ was 103%, and Honeywell’s was 76%.

For the readymade tea beverage industry, among list companies, as of the first half of 2024,

The debt ratio of Cha Baidao was 25%, and that of Nayuki Tea was 34%.

It can be seen that the debt ratio between different industries may vary greatly. The highend

manufacturing industry remains above 75%, while the debt ratio of the readymade tea beverage

industry is relatively low. However, within unraveling ad metrics: a guide to interpreting your results the same industry, there are definitely differences in debt

ratios between companies, but the difference will not be huge.

Bas on this, the author read Gu Ming’s latest prospectus and found that Gu Ming, which is about to go

public, seems to have a high debt ratio. In fact, it is because this ” financial liabilities measur at fair

value and whose changes are includ in current profit and loss ” accounts for a considerable proportion.

As of the end of September 2024, the amount of this financial liability is 3.2 billion yuan

Industry insiders who have financial knowlge will understand that this is actually caus by the accounting measurement method.

Gu Ming receiv equity investments from Meituan, Sequoia Capital, Coatue, etc. in its early days.

This type of equity investment often comes trust review with some priority rights such as “remption rights”, so it

will be regard as “preferr stock.” According to the rules, it will be record as “financial liabilities measur at fair value and its changes are includ in current profit and loss” in accounting measurement Deconstructing Gu Ming.

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