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.

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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.

Central Bank Balance Sheets: What Will They Look Like in 2016-2017?

MishTalk

Central Bank Policy Rates Current Rates Bank of England: 0.50% Bank of Japan: 0.10% Fed: 0.00%-0.25% (currently 0.14%) ECB: 0.05% Central Bank Balance Sheets Three Questions Other than asset bubbles, what do we have to show for this? When do asset sheet balances approaching 100% of GDP matter? Visit [link] to learn more about wealth management and capital preservation strategies of Sitka Pacific Reader Gary emailed a link to JP Morgan's Quarterly Market Guide.

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. Visit [link] to learn more about wealth management and capital preservation strategies of Sitka Pacific Mike "Mish" Shedlock Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management.

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.

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.

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? I am a strategy consultant at.

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

Market Cycles

CaseInterview.com

This can be an emergency savings fund or cash reserves on the balance sheet. How to Live an Amazing Life – Sign Up for Free Tips and Strategies for your Career and Life. All things have a natural cycle. The sun rises; the sun sets. The tide comes in; the tide goes out.

Debate Over Fed's Exit Strategy Continues: Bernanke vs. Dudley vs. Yellen

MishTalk

Yesterday, former fed chair Ben Bernanke said " No Need for Fed to Shrink Balance Sheet ". The Federal Reserve does not need to shrink its $4 trillion-plus balance sheet by even "a dime" for it to normalize monetary policy when the time comes, former Fed Chair Ben Bernanke said on Monday. Bernanke said Thursday, in a change of tone on how the Fed will execute its exit strategy from crisis-era interventions.

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

5 Ways Your Data Strategy Can Fail

Harvard Business

Paradoxically, “data” appear everywhere but on the balance sheet and income statement. Mint Images/Getty Images. There are plenty of great ideas and techniques in the data space: from analytics to machine learning to data-driven decision making to improving data quality. Some of these ideas that have been around for a long time and are fully vetted, proving themselves again and again. Others have enjoyed wide socialization in the business, popular, and technical press.

The Challenges of Buying (and Selling) a Business

Martinka Consulting

This is a project-based business and work in process was not being recorded on the balance sheet. Business Buying Exit Strategies Weekly MemoA month or so after a business buy-sell transaction the buyer said he had found some challenges but was making his way through them. Finding a business to buy is much different than finding a house to buy.

Human Resources Management – How to Get Started

Tom Spencer

Human resource teams are critical to the growth of a company since employees typically represent both the biggest operating expense and largest off-balance sheet asset for most businesses.

Pretending to be stupid

Seth Godin Blog

We can follow a nuanced discussion of strategy. 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. If we’re being honest, the real reason we don’t do this work isn’t that we’re stupid.

Beware of Incomplete Information

Martinka Consulting

” She deciphered this by looking at the third quarter P&L and an October 23 balance sheet. ” Sure enough, the company’s job system and accounting system only sync at the end of the month so the drop in net income, as per the mid-month balance sheet, was fiction. Business Buying Exit Strategies Increasing Value Weekly MemoTime goes fast. Years whiz by, quarters, months, and weeks come around too soon.

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.

You Don’t Need to Be a Silicon Valley Startup to Have a Network-Based Strategy

Harvard Business

For most companies intellectual property is something that sits on their balance sheet. Different companies can pursue quite different platform strategies based on what kinds of capital they choose to network together. Growth strategy Business models Social platforms Digital ArticleThe success of platform companies like Airbnb, Amazon, and Netflix has led to envy bordering on despair for their competitors.

Can an Expense Be Profit?

Martinka Consulting

His balance sheet is a mess. Marketing strategies have to be tried and you have to realize they won’t all work. Business Buying Exit Strategies Weekly MemoLast month a friend referred me to a business owner wanting to sell his company. His primary motivation was he’s burned out and the driving force for the burn out is 2015 was not a good year financially. Sales were down from 2014 and expenses were up. But this is not the point of the story.

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?

Flip the Switch

Martinka Consulting

One of the first things I do when I see financial statements is check if the year-to-date income on the P&L is the same as the year-to-date income on the balance sheet. It is tough to manage a business, be in control, and implement (a new) strategy. Business Buying Exit Strategies Increasing ValueRecently I got an e-newsletter from my friend Allan VanderHamm with Berntson Porter.

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.

Draghi Pressures ECB to Buy "Junk-Rated" Loan Bundles of Greece and Cyprus

MishTalk

On September 4, ECB President pulled out a financial bazooka including a pledge to build up the ECB''s balance sheet by another €1 trillion. Bundesbank president Jens Weidmann, who also sits on the ECB’s policy making governing council, has already objected to the plan to buy ABS, which he says leaves the central bank’s balance sheet too exposed to risks. In this case, the stench on Greek bank balance sheets will not go away.

ECB Now a Hedge Fund; €1T Bazooka; ECB Promotes Euro Carry Trade; Draghi Has it Backwards

MishTalk

Question: Mr Draghi, you said that the new measures and the TLTROs will have a sizeable impact on your balance sheet. So all this makes a precise estimate of the impact that these transactions will have on our balance sheet very complicated, especially at the stage when none of these operations have as yet been undertaken. The second aim is to steer, significantly steer, the size of our balance sheet towards the dimensions it used to have at the beginning of 2012.

Another "Print Your Way to Prosperity" Mindless MMT Proposal

MishTalk

The Fed’s tapering merely slows the growth of its balance sheet. The rarely admitted truth, however, is that there is no need for central banks’ balance sheets to shrink. They could stay permanently larger; and, for some countries, permanently bigger central-bank balance sheets will help reduce public-debt burdens. Visit [link] to learn more about wealth management and capital preservation strategies of Sitka Pacific

Former Fed Governor Thomas Hoenig Says US Banks Undercapitalized, Unsafe, and Unsound

MishTalk

In a recent speech, Mr. Hoenig noted that under American accounting rules, derivative holdings add $300 billion to the balance sheets of five top banks — JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs and Morgan Stanley. This higher capital ratio is achieved by reducing on-balance sheet assets by a pre-assigned risk weight and excluding off-balance sheet assets, such as derivatives.

Swiss Gold Referendum in Perspective

MishTalk

After the implementation of the EURCHF floor, gold’s share of the SNB balance sheet has fallen to 7.5% from around 30% in 2007 (top chart) [SNB Balance Sheet]. Taking the current balance sheet of 522bn CHF and spot gold prices, the requirement to hold at least 20% of assets in gold would necessitate buying 1,800 tonnes of gold over 5 years. Visit [link] to learn more about wealth management and capital preservation strategies of Sitka Pacific

Getting Your Deal Done

Martinka Consulting

The title is the theme of the book with each chapter being a deal tip or strategy (and it’s available on Amazon). Have a strong balance sheet. Business Buying Exit StrategiesOriginally published on ibainc.com blog in February 202! I was honored to have IBA team members Gregory Kovsky and Curt Maier contribute a chapter to my latest book, Getting the Deal Done. The book is 61 short chapters, 50 of them written by me and 11 by other deal pros like Gregory and Curt.

Mish's Global Economic Trend Analysis: Reader Question: Does the.

MishTalk

Balanced Budget Ammendment Sign the Balanced Budget Petition. Reader Question: Does the Fed Balance Sheet Properly Reflect QE Announcements? The feds balance sheet doesnt reflect it. The balance sheet was up $720 billion from Aug 1, 2012 to Aug 1, 2013 ($309B in treasuries and $393B in MBS) but that is only $60B per month. So if QE is $85B a month, where is it and why doesnt it show up in the Feds balance sheet.". MISHS.

New Tools! More Pure Bank Profit!

MishTalk

Inquiring minds are monitoring the Fed''s Balance Sheet. One more week like this and the FED balance sheet will be $1 trillion more than last year at this time. The Federal Reserve is getting more involved in debt markets as it tries to compensate for the impact of its almost $4 trillion balance sheet on short-term interest rates. Three rounds of so-called quantitative easing have enlarged the Fed’s balance sheet to almost $3.8

Tools 60

"Whatever It Takes" Stage Two; Headwinds Explain Why Draghi Will Fail This Time

MishTalk

Having already cut interest rates to record lows and saying they can go no lower, Draghi is now focused on boosting the ECB’s balance sheet. We are quite confident that the impact on our balance sheet size will be adequate, will be significant, will be sizable,” Draghi said. The main message is that our balance sheet will keep expanding in the coming months and will continue expanding while the balance sheets of other central banks is bound to contract.

Has COVID-19 Derailed Your Planning? Tips From a Crisis Management Expert

Martinka Consulting

For most business owners I’m guessing your strategy is off track and any exit planning is on the back burner given our minds are on the ramifications of the COVID-19 virus. If you have a line of credit, consider using it to get cash on your balance sheet. Exit Strategies Increasing ValueWhat is probably on the minds of many is, “How and when can I get out as I don’t want to rebuild it again?”. It comes down to choices.

Mergers & Acquisitions: Valuation

Tom Spencer

LAST post, I highlighted the importance of strategy when considering the viability of a potential acquisition; however, before a final decision can be made, a consultant needs to estimate the value of the target company. 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.

M&A deals – benefits and drawbacks

Tom Spencer

Many consulting, corporate strategy, and corporate development roles require the interviewee to go through an M&A case study. 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.

Steen Jakobsen: US Credit Cycle Peaked, Zero Growth Coming to Europe, Gold 1425 by Year End

MishTalk

Central Bank Balance Sheets Excuse me? Hard even to see change in ECB balance sheet. Visit [link] to learn more about wealth management and capital preservation strategies of Sitka Pacific Saxo Bank chief economist sent a number of charts and comments that constitute his outlook for global macro fundamentals for the next 6-7 months. Via email, the rest of what follows is a guest post from Steen Jakobsen.

Two-Week Price Inflation in Argentina hits 30%, US Products Lead the Way; Currency Devaluations Hit P&G Earnings

MishTalk

P&G, which in January announced second quarter earnings results that were already feeling the ill effects of foreign exchange rates, said Tuesday afternoon that it would incur a charge between $230 million and $280 million, or 8 cents to 10 cents per share, a one-time charge resulting from revaluing its Venezuelan balance sheet in the wake of a change in the way the Venezuelan bolivar is valuated. Price of many goods in Argentina soared in the past two weeks.

One Track Minds Means Inefficiency

Martinka Consulting

I see a bunch of single issue councilmembers with no big picture focus or strategy. A friend doesn’t believe in business plans, strategy, metrics, job descriptions, etc. From bidding (his expertise), to sales (he was good once it got to the technical part), and accounting (of which he knew almost nothing, especially regarding the balance sheet). I look across the lake (figuratively) at Seattle and its City Council.

Reflections on "Paper Reserves" of Central Banks; Gold and the Tapering Disconnect

MishTalk

In Fed Balance Sheet vs. Stock Market; Will QE Cause Inflation? Fed Balance Sheet vs. Stock Market. For more on the balance of trade problem and how to permanently fix it, please see Hugo Salinas Price and Michael Pettis on the Trade Imbalance Dilemma; Gold''s Honest Discipline Revisited. Visit [link] to learn more about wealth management and capital preservation strategies of Sitka Pacific

Why Financial Statements Don’t Work for Digital Companies

Harvard Business

This becomes clear when you look at a company’s two most important financial statements: the balance sheet and the income statement. For an industrial company dealing with physical assets and goods, the balance sheet presents a reasonable picture of productive assets and the income statement provides a reasonable approximation of expenses required to create shareholder value. Let’s first look at the balance sheet. steven moore for hbr.