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Gold/Mining/Energy : Mirant Corporation (MIR) -- Ignore unavailable to you. Want to Upgrade?

To: Braincramp who wrote (251)	2/23/2002 2:52:55 PM
From: Oeconomicus	Read Replies (1) \| Respond to of 903

The BV may say that a co has x billion in tangible assets but if their disposal value is half, someone is out a bunch of money. Don't have a brain cramp or anything, but you are wrong. No one is "out" anything. Disposal value, aka liquidation value, only matters if the business is not a going concern or if liquidation value exceeds going concern value. In other words, as long as the business is not insolvent and can be expected to employ the assets to generate a return that is sufficient to justify keeping investors' capital tied up in it (i.e. returns on capital employed exceed the cost of that capital), disposal value is irrelevant. By your logic, if one can call it that, one should value General Motors based on the scrap value of its buildings and machinery, and WalMart based on the liquidation value of its inventory. Sorry to be so harsh, but your statement was plain silly.