The secret to unlocking hidden value in the balance sheet

McKinsey

But combining analytics with a holistic approach to balance sheet management can help capture the opportunity and improve performance. For many companies, managing financial resources is a challenge. Risk Insights

Balance Sheet Reduction Starts October: Like “Watching Paint Dry”

MishTalk

As expected the Fed will begin balance sheet reduction in October. The Fed penned in one more rate hike in December as its FOMC statement shows the hurricanes will have no lasting effect on anything. more…). Economics

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Ignore the Balance Sheet at Your Own Risk

Martinka Consulting

He told me something that’s stuck with me when he said how as an operator he was concerned with the profit and loss statement but as a deal person he found an appreciation for the balance sheet and its importance. The balance sheet tends to get overlooked by many businesspeople, sellers, and buyers, which is a shame. The balance sheet is filled with information, some of which is: How does the company manage its cash flow and what level of working capital is needed?

Fed Openly Discusses "Permanently High Balance Sheet"; Lie Finally Admitted

MishTalk

Merits of Not Shrinking the Balloon When the Fed first launched QE, they stated they had the "tools" necessary to shrink their ballooning balance sheet. Once the Federal Reserve lifts interest rates from near zero, likely this week, the focus will turn to the other legacy of the crisis-era policies: the Fed's swollen balance sheet. A " permanently higher balance sheet.

Fed Balance Sheet vs. Stock Market; Will QE Cause Inflation?

MishTalk

Balanced Budget Ammendment Sign the Balanced Budget Petition. Fed Balance Sheet vs. Stock Market; Will QE Cause Inflation? Fed Balance Sheet vs. Stock Market. The risk premiums of risky securities have become unsustainably compressed in the process, and the Feds balance sheet has metastasized to $3.5 The Fed would probably show an insolvent balance sheet today if its holdings were actually marked-to-market. MISHS.

Diving Into Deutsche Bank’s “Passion to Perform” Balance Sheet

MishTalk

Deutsche Bank shares have collapsed to lows deep under crisis lows and collapse of Lehman in the Great Financial Crisis. … Continue reading → Economics

Financial Engineering Chart of the Day: Fed Balance Sheet vs. S&P 500

MishTalk

Fed Balance Sheet vs. S&P 500 I was playing around with some ideas on the St Louis Fed "Fred" database and came up with this. Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Fed Balance Sheet Unwinding Expected “Relatively Soon”: Let the Debate Begin

MishTalk

In addition to its standard boilerplate about inflation, the Fed stated it would begin balance sheet normalization “relatively soon” Here is the full Text of the FOMC Press Release. As expected, today’s FOMC meeting came with zero surprises. more…). Economics

Fed Lays Out Plan to S L O W L Y Reduce Balance Sheet: How Long Will It Take?

MishTalk

Balance sheet reduction hasn’t started yet, nor did the Fed even say when it would start. Once balance sheet reduction starts, the cap will be $10 billion a month rising to $50 billion a month, on a schedule not posted. In addition to hiking today, the Fed announced its Plan to Shrink Asset Holdings Beginning This Year. Since the Fed will announce the start date in advance, its eye would appear to be focused on December.

Apple's Balance Sheet Math: Does Apple Really Have $203 Billion in Usable Cash on Hand as Widely Reported?

MishTalk

Current Liabilities Cash Much Smaller Than You Think I don't often dive into balance sheets, but did so after reading a Market-Watch opinion by Brett Arends. billion in “off-balance-sheet” liabilities. If “off-balance-sheet” is not included in my totals, then subtract another $31.5 Yes, companies in general could spend their reported cash numbers, but to do so would further leverage their balance sheets with debt.

Millennials Mired in "Wealth Gap" as Older Americans Gain; Housing Crash Continues to Overshadow Young Families' Balance Sheets

MishTalk

The average value of housing on young families’ balance sheets remains about 35 percent below its 2007 level, the St. These changes going on with individual balance sheets could have impacts on the whole economy,” said William Emmons, an economist at the St. Housing Crash Continues to Overshadow Young Families'' Balance Sheets And so here we are.

Fed Minutes Show Reliance on Consumer Confidence, Sentiment, Soft Data: Balance Sheet Normalization Schedule Set (It Won’t Be Met)

MishTalk

The Fed also firmed up its Balance Sheet Normalization Plans. The Fed released the Minutes of June 13-14 FOMC meeting today. The minutes show an overreliance on regional report soft data and consumer confidence measures instead of hard data measures. more…). Economics

What a Business Financial Statement Can Tell You About the Health of Your Business

Tom Spencer

Business Strategy balance sheet business planning cash flow statement financial statements income statementWhen you run your own small business, it can be difficult to keep an objective distance from what you do. Bills come in, sales go out, you have your day-to-day goals and you watch the curvy line of profit and loss make its inexorable progress throughout the financial year.

A primer in resilience: Maximizing value beyond earnings

McKinsey

Empowering the finance organization to take decisive action to strengthen the balance sheet is critical to achieving organizational resilience. Transformation Insights

Banking imperatives for managing climate risk

McKinsey

Financing a green agenda is also a commercial imperative—but specialized skills are needed to protect balance sheets. More than regulatory pressure is driving banks to manage climate risk. Risk Insights

A primer in resilience: A conversation with Kevin Carmody

McKinsey

Having a resilience plan in place can set a company apart from its competitors while simultaneously improving cash flow and strengthening the balance sheet. Transformation Insights

Consultant Ninja: A Simple Question about the Credit Markets.

Consultant Ninja

Heres my understanding of the current TARP/TARPII/PPIP/etc plans: The major "sick" banks wont lend to businesses, because their balance sheets are tied up with bad assets that they cant sell. I realize that is a gross simplification, but if the gist is right, it leads me to a simple observation: Why doesnt the government just give long-term loans to the healthy banks (building up their balance sheets) so that they can loan to businesses? skip to main | skip to sidebar.

Time for insurance companies to face digital reality

McKinsey

Regulation, product complexity, and insurers’ large balance sheets have kept digital attackers from insurers’ gates. That is changing, but in ways incumbents should embrace. They can flourish in the digital age—if they move swiftly and decisively. Our Insights

GE’s Pension Time Bomb: Shortfall $31 Billion and Rising

MishTalk

It’s a $31 Billion Balance Sheet Hole That Keeps Growing. GE has the largest pension shortfall in the S&P 500. more…). Economics

Internal Feuding Within the ECB Over Tapering: Reflections on Monetary Policy

MishTalk

At the Fed, the debate is over normalization of the balance sheet. The ECB is still addicted to a balance sheet build-up. In contrast, the ECB is still addicted to a balance sheet build-up. The Fed has already finished tapering. But i. But internal feuding has picked up with Germany and the hawks on one side and doves on the other. more…). Economics

Dear ECB, What’s in Your Wallet?

MishTalk

Last week the ECB reported that its balance sheet Expanded by €11.26 billion to €3.249 trillion. What is the makeup? … Continue reading → Economics

Facing digital reality

McKinsey

Regulation, product complexity, and insurers’ large balance sheets have kept digital attackers from insurers’ gates. That is changing, but in ways incumbents should embrace. They can flourish in the digital age—if they move swiftly and decisively. Our Insights

Why Tax Reform Changes Nothing -- and Everything

Strategy+Business

We've never had a moment in which so much cash will be sitting on corporate balance sheets. Tax reform actually changes everything. The most strategic-minded executives will see this opportunity as a watershed moment to reevaluate how they allocate cash

Rising COVID cases, falling economy

Tom Spencer

Since the start of February this year, the Fed has expanded its balance sheet by more than $2.4 To put that in context, the Fed was created in 1913, and its total balance sheet assets only reached $2.4 trillion in assets, but only 2 months to achieve the same amount of balance sheet expansion this year. What does Fed balance sheet expansion mean for the US economy?

Monthly Macro Video: Mish With Gordon Long – Spotlight on the Fed, GDP Prospects

MishTalk

This month we discussed the Fed rate hike, the State of Illinois, loan creation, autos, housing, the yield curve, the Fed’s balance sheet, and GDP prospects. Once a month I get together with Gordon Long for a videocast of the month’s hot news topics. The video is about a half-hour long. Mike “Mish” Shedlock. Economics

Why Tax Reform Changes Nothing -- and Everything

Strategy+Business

We've never had a moment in which so much cash will be sitting on corporate balance sheets. Tax reform actually changes everything. The most strategic-minded executives will see this opportunity as a watershed moment to reevaluate how they allocate cash

Coronavirus & Consulting Offers

Tom Spencer

If the firms don’t have a strong balance sheet, if they foresee a potential cash flow problem, or if they have clients in particularly hard hit industries, I’d be concerned. Reading Time: 3 minutes. The coronavirus epidemic has rattled the planet.

Two Ways for Blues to Prepare for Industry Consolidation

BCG

These mergers will produce tough competitors with diversified portfolios, sturdy balance sheets, greater scale, and advanced capabilities, including consumer engagement, provider collaboration and informatics, population management, and digital channels. Article Thursday, April 14, 2016. Of all the challenges faced by the Blue Cross and Blue Shield Plans, few are as significant as the likely mergers of the big US health care companies.

Apologies, owed

Seth Godin Blog

Forgiving a financial debt costs your balance sheet. Money owed accrues interest. Banks and credit card companies thrive on this. The borrower gets to keep using the money, and the lender ends up with more in the end. Apologies owed, on the other hand, accrue nothing whatsoever of value, to either side. Forgiving an owed apology frees you to be generous again

It’s Not “Time Management.” It’s Lean.

Markovitz Consulting

Unfortunately, companies in the lean community don’t seem to take much note of, or try to copy these experiments, probably because the benefits aren’t reflected on the income statement or balance sheet. In the space of two weeks, the New York Times and the Wall Street Journal both ran articles on the productivity benefits of reduced work hours. The WSJ introduced us to the workers at Rheingans Digital Enabler in Germany, who only put in five-hour days, for a workweek of 25 hours.

Pretending to be stupid

Seth Godin Blog

We can learn to read a balance sheet and we can get sophisticated about long-term decision making. Intellectual horsepower is overrated. “I’m too stupid to do that,” isn’t helpful and it’s probably not true. We’re capable of learning Photoshop, We can figure out the arithmetic behind our analytics. We can follow a nuanced discussion of strategy. If we’re being honest, the real reason we don’t do this work isn’t that we’re stupid.

M&A deals – benefits and drawbacks

Tom Spencer

If there are debts owed by each organization, then the M&A process may increase the total balance sheet debt of the combined company. If the bidding company used debt to finance the acquisition, this will further increase the total balance sheet debt of the combined entity, which can increase the risk financial distress and bankruptcy. Many consulting, corporate strategy, and corporate development roles require the interviewee to go through an M&A case study.

Mergers & Acquisitions: Valuation

Tom Spencer

Building on information provided in Management Consulting: A Guide to the Profession , I highlight three approaches that a consultant can use when performing a valuation: Balance sheet valuation; Market based valuation; and. “Price is what you pay. Value is what you get.” ” ~ Warren Buffett.

Reader Question on Banking System Insolvency, QE, and "Necessity"

MishTalk

reader Dave, a friend, noted that as the Fed jacked up its balance sheet, velocity has mirrored the curve to the downside. Dave asks " Can''t an argument be made that since much of the banking system is really insolvent, that the Fed increasing its balance sheet is necessary? " "Necessity" This depends on what you mean by "necessary" and more importantly, who gets to decide. In response to Will Prices Rise Significantly When Velocity of Money Picks Up?

Nothing Magical About 2% Inflation Target Says Bernanke

MishTalk

Bernanke also made the case in his presentation for keeping the Fed’s balance sheet big in the aftermath of the financial crisis. [Is Most other major central banks have permanently large balance sheets and are able to implement monetary policy without problems,” he said. Bernanke said he was not making a recommendation about how big the balance sheet ultimately should be.