"Equity" clarification... include retained earnings?

[akanska]

Just trying to straighten some thing out here. When ratios/calc’ns “equity”, does one include retained earnings? Here are some examples.
1. Holding effects in currency translation- you include retained earnings in equity right?
2. Leverage ratios- use total shr-holders equity (inc’g retained earnings)?
3. WACC D/E use mkt value of equity?
4. RI we use BV of Equity (inc’g retained earnings??)? This seems strange to me because we should be taking a charge for required return to equity right… so shouldn’t mkt value be used to reflect true residual income, analagous to WACC in EVA calc’n being based on MKT values??
Anyone?

 

[bhill020]

1. Include RE
2. Include RE
3. Market Value of equity (usually in a question, it’s share price x # of shares o/s)
4. Include RE
90% sure…lets see what others say.

 

[mcpass]

1 yes
2 yes
3 no - forget book values here you need the market price
4 yes
so pretty much all the time.

 

[akanska]

cool, thanks guys. I’m so excited to kill this thing on saturday!!!

 

[cding]

Can someone please tell me if the B0 below is = equity on the BS or share price x # of shares?
B0 + (ROE-r)*B0 / (r-g)

 

[ahmadmaghfur]

thats beginning book value : total shareholders’ funds… (excluding minority interest i presume)