Archive for the ‘profitability’ Category
Saturday, November 21st, 2009
Fallen Angels and crossover credits are often targeted by alternative investor groups like hedge funds and risk arbitrageurs who speculate on the mispricing between the various financing instruments of a company.
Characteristics of Fallen Angels:
- High leverage in respect to operating cash flows
- Weak industry trends lead to low and unpredictable operating cash flows
- A further deterioration of the operating performance is not sustainable with the financial profile
- Loss of market share
- Not enough liquidity to support the ongoing business
- Decreasing asset quality
- Management is unable to identify profitable business units
- Weak and complex debt structure
- Unfavorable regulatory environment and lack of support by the government (mainly for European companies)
Tags: Aids finance, Debt, economics, estate, Estate Planning, heir, income, inheritace, insurance, Interest, joit, last will, Market, market cycle, rate, tenancy
Posted in management, merchandise, money spending, negotiationg, online bank, payments, profitability | Comments Off
Monday, October 26th, 2009
The correlation between the debt and equity markets’ measures of risk has been extremely strong over the recent years. External shocks, for example the tragic events of September 11, 2001, the LTCM disaster in 1998 or the Asian crisis, have a substantial impact on credit spreads as well as on implied equity volatility. Consider the relationship between implied volatility of call options on Dow Jones Euro Stoxx 50, and the spread versus government bonds of the MSCI Euro corporate bond index.
One way of interpreting implied volatility on an equity index is as the compensation that the investors receive for taking on equity risk. The index of credit spreads represents the additional yield investors demand for holding corporate debt over benchmark government debt. While there have at times been brief periods of divergence, these two risk measures typically move together. For example, in 1993/94 banks in the United States cleaned up their balance sheets by writing down nonperforming assets, causing the VIX index, representing the implied volatility of put and call options on the S&P 100, to fall to a historical low just above 10 percent. The decline in implied equity volatility triggered a credit spread rally. Asimilar thing happened in 2002. Average credit spreads collapsed by half, as did optionimplied volatility. So the decline in volatility was a major driver of credit spread tightening. However, one tends to find that when implied volatility falls below a certain threshold the effect of small changes on spreads is rather subdued.
Tags: business, crisis, finances, foreclosure, investments, loans, money advice, money problems, stock, stock exchange
Posted in merchandise, money spending, negotiationg, online bank, payments, profitability, real estate | Comments Off
Sunday, October 25th, 2009
The level of implied volatility is a widely used indicator for risk appetite, and, on the individual company level, for the uncertainty related to future earnings. It is also considered a good measure of equity-market risk, because the higher the implied volatility the higher the price of equity options, and thus the higher the cost of insuring against equity-market downturns. Corporate bond spreads reflect the compensation that the investors demand for taking on credit risk. While the debt and equity markets’ estimates of risk, as explained by the Merton model, tend to move together, temporary disconnections do occur. The combination of low levels of implied equity volatility and wide credit spreads suggests the potential for the credit spreads to tighten, as the divergence in the equity and credit market eventually gets corrected. Conversely, when implied equity volatility appears high relative to credit spreads, credit markets are more optimistic about business risks in the corporate sector. The decoupling in the second half of 2003, however, was not an indication that credit spreads were rich relative to implied equity volatility. Rather credit markets were faster to cash in on the reduced risks in the corporate sector because of the massive balance sheet deleveraging, especially in the telecom sector.
Corporate managers were selling off assets, issuing equity and keeping cash for the debtholders, as opposed to using the cash to buy back stock for the first time in 10 years. By the end of the year, equity volatility came down significantly, closing the gap in the assessment of risk.
Tags: foreclosure, loans, mortgage, shares, tax, taxes, tenancy, Tenancy-in-Common, tenant, trade value
Posted in payments, profitability, real estate, research, stocks, strategy elements, taxes | Comments Off
Monday, August 3rd, 2009
That’s good—as a beginning. Now, you need to get into details, by asking a few questions and coining up with solid answers:
- How are you going to increase sales?
- What expenses are you going to cut? How?
- What new products will you develop?
- How will you reach different markets in different ways?
- How can the company become more efficient? In what areas?
Of course, you may want to set ancillary goals in each of these areas. But beware of goals that set department against department, worker against worker. For example, goals for marketing, which are measured in terms of sales, might cause resentment if there are other factors that could affect sales—just as sales goals might not be met because an improvement in efficiency caused a drop in the quality of the products the sales reps are trying to sell.
Tags: benchmark, CEO, economy, sales
Posted in customer demand, employee, expenses, funds, payments, profitability | Comments Off
Sunday, August 2nd, 2009
Except in the movies, nobody has ever made the leap from start-up to success in one jump. The company needs a well-thought out plan built on steps, strategies, and benchmarks to reach its financial goal.
If your financial goal, for example, is a profit of $12 million, you might decide on the following steps:
- Increase sales
- Cut expenses
- Develop new products
- Innovate marketing
- Improve efficiency
Tags: benchmark, CEO, company, economy
Posted in attitude, innovative marketing, payments, profitability, strategy elements | Comments Off
Sunday, August 2nd, 2009
It’s possible to plan on the low side, of course, to set a financial goal that your company can reach easily. That may be a good idea for some new companies, allowing them to focus on building a solid foundation rather than stretching to meet a higher goal. But if the economy is generally good, easy goals can promote lax attitudes, keeping your company from becoming truly competitive. Then, if the economy starts to decline…
The bottom line here: Know your company and then set an appropriate financial goal.
Tags: CEO, company, economy, executives
Posted in accounting, attitude, business patterns, business publications, profitability | Comments Off
Sunday, August 2nd, 2009
How are you going to measure your success as a company in financial terms? The most basic measurement is a profit goal. You might also want to set ancillary goals—growth goals, sales goals, or whatever you think would be the best ways to gauge your progress and help you achieve your primary financial goal.
Then, ask a few hard questions. Is your goal realistic? Is it achievable? Are there ways to leverage the overall goal to achieve the financial goal? If not, one or the other has to be reconsidered.
Some CEOs seem to set goals according to their sense of business ideals or to really push their workers to the limit. Goals of IS percent profitability and 10 percent growth, for example, may sound great and look great on paper. But are they realistic for your company? Can you actually expect to achieve them? Also, if the overall economy is suffering, 15 percent and 10 percent might be improbable goals even for established companies.
Tags: CEO, company, entrepreneurs, executives
Posted in campaigns, financial principles, funds, merchandise, profitability, strategy elements | Comments Off