Coronavirus: Some Thoughts on the Cost of Capital during the Crisis (Part 1: Equity Parameters)

Crises are times of change and of uncertainty. For equity investors this requires some fresh thinking on fundamental analysis (see HERE and HERE) but also some fresh approaches to the determination of the cost of capital of companies. The latter one is the topic of today’s post. In our discussions we will focus on the WACC/CAPM environment as […]

Matthias MeitnerManaging Partner, VALUESQUE

Coronavirus: Accounting Standard IFRS 9 – Coronavirus Crisis is NOT Financial Crisis 2008!

On page 1 of its Commission Regulation (EU) 2016/2067, 22 November 2016, the European Union commented in the context of the adoption of the new accounting standard for financial instruments, IFRS 9: “The standard aims to improve the financial reporting of financial instruments by addressing concerns that arose in this area during the financial crisis. […]

Matthias MeitnerManaging Partner, VALUESQUE

Coronavirus: A brief Fundamental Analysis Manual for Equity Investors (Part 2)

As an add-on to our first part of the Covid-10 Fundamental Company Analysis Manual (HERE) we today provide the second part of this manual with some more aspects to look at for an equity investor. Take care of Currency Effects Along with international capital market distortions we could also see some rather material exchange rate […]

Matthias MeitnerManaging Partner, VALUESQUE

What is Debt??? Or: In Defence of the Fitch Approach on how to treat Leasing Liabilities

In a very interesting article about the analytical state of the new lease accounting under US-GAAP and IFRS, the always brilliant Footnote Analyst (HERE) showed recently amongst others that the big credit rating agencies do not agree in terms of how to consider the payment obligation from lease contracts. While Moody’s and S&P’s classify it […]

Matthias MeitnerManaging Partner, VALUESQUE

Funding hard assets in the equipment hire market

Whatever the sector – from plant hire to broadcast and AV equipment, to more specialist business assets such as brewery plant or temporary road barriers – you can hire the operating machinery and equipment rather than buy it. One consistent issue for the hire organisations is access to working capital to fund acquisitions or Capex to replace obsolescent equipment and remain competitive. New equipment   New equipment purchases typically fall […]

Tim Chapman FRICS, MScDirector, Hickman Shearer

Little Swindles in the Dark? How Earnings per Share are calculated in Practice

It is reporting season these weeks! Best time for a little numbers game (for another recent numbers game see our post on how to detect fraud using Benford’s frequency-of-digits rule HERE). Today’s game is about one of the core data in every corporate reporting: The Earnings per Share (EPS). But we do not look at the […]

Matthias MeitnerManaging Partner, VALUESQUE

Northgate’s Depreciation Game – The “Fixed Assets become Inventories” Financial Analysis Problem

Northgate Group Plc. is UK’s biggest provider of light commercial vehicle rental services, with operations in UK, Spain and Ireland. Its business model is relatively straightforward. The company acquires the vehicles, rents them out over a certain period and sells them at the residual market value at the end of the renting phase. Source: Northgate, […]

Matthias MeitnerManaging Partner, VALUESQUE

EWP Business Consulting joins IR as the exclusive Business & Asset Valuations Member in Portugal

IR Global, the world’s largest exclusive network of advisory firms is delighted to introduce Paulo Lopes of EWP Business Consulting. Paulo has joined IR as our exclusive Business & Asset Valuations Member in Portugal. EWP follow the excellence in all the work done. We assume the daily commitment to develop and put all our knowledge and […]

Paulo LopesManaging Partner, EWP Business Consulting

Diageo’s Liquor Business – The Maturing Inventory Financial Analysis Problem

Sometimes inventory is a pure pass-through, such as for typical trade businesses. Sometimes it is developed and transformed via work conducted within the firm into a final product, such as for typical producing businesses. And sometimes it simply transforms itself into the final product – without any meaningful contribution of the company. This latter case […]

Matthias MeitnerManaging Partner, VALUESQUE

Continental’s Mix Effects: Another Segment Reporting Financial Analysis Problem

In the past, we already shed some light on the problems of reading the appropriate information from segment reportings of companies, but more in a general way (LINK). This time we provide a concrete example of why understanding segment information is highly important when performing business valuations. Here it is not an accounting problem and […]

Matthias MeitnerManaging Partner, VALUESQUE

Telefonica DE’s OIBDA growth rates: Another Non-GAAP Financial Analysis Problem

Telefonica Deutschland (TEF DE) is a German based telecommunication company and network operator. It serves roughly 50 mio customers, most of them with a mobile contract. The company engaged in a transformative acquisition in 2014 when it bought E-Plus, one of the other big German network operators at that time. Synergies seemed to be high […]

Matthias MeitnerManaging Partner, VALUESQUE