Some cities are the first states to develop this encouraged by the development banks system. Trust given to a currency and credit of public debt is mainly based on the ability of the state to raise taxes and to honor its commitments.
A state is supposed to be the master of the game, it sets the legal framework surrounding public debt, may resort to tax, devalue or even change currency as shown by the Car Loan Finance Broker.
However, there are limits as evidenced by the Laffer curve in the use of tax and, in a world that is increasingly globalized, where exchanges are essentially transnational, each State must deal with its partners and international treaties in a global capital market.
Most states in the world are in debt. Global public debt was more than 40,000 billion dollars in 2011. The public debt stood at around 1,700 billion euro in 2011 and the burden of debt, that is, interest, amounted to 45.4 billion euro (in 2011) about 15 % of the state budget or 1700 euros per household.
Some debts, such as future pensions are called implicit and are usually not included in the public finances, because they are too complex to understand. Indeed, it is difficult to estimate their costs. However, when economists try to make an assessment, it is called net debt as the difference between assets and liabilities handled by the Car Loan Finance Broker.
In particular, if the price of property such as a house fluctuates its debt generally evolves according to a precise schedule. For a business, the economic conjecture can become unsustainable if the sale of goods or services it produces no longer allows it to pay employees.
In 2010, a debt of over 3.5 trillion dollars was accumulated by developing countries. These debts are the manifestation of a desire to develop. But some states, particularly African countries, due to political instability (civil wars), problems of endemic corruption, leakages of capital under dictatorships, are or have been indebted and unable to cope with repayment deadlines.
Discounted Cash Flow Method (DCF): It involves calculating future cash flows adjusted for time value , discounted at a rate representing the opportunity cost of obtaining capital employed. The total value of the company consists of the present value of the cash flows within the forecast period continuation value representing liquidity funds after the forecast period.
Determining the value based on market prices for similar assets is to determine the value of a company based on the value of a similar company. The most widely used multiple is the price-earnings ratio (PER by Price Earnings Ratio) of a similar company to act in the same industry.