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Many an economics and finance course later, I see that the layers of complexities to the 2008 financial crisis are innumerable. The senior slices of a CDO were considered to be safer because they had first priority on cashflows received from the pool of mortgages in the event of default. It all seemed so clear.
Since Immelt’s departure, GE’s stock is down another 30%, as its new CEO, John Flannery, has struggled to cope with the cashflow drain from years of problematic acquisitions, divestitures, and buybacks. The Board Had No Finance Committee. in 2013 to 3.7 in early 2018, according to Moody’s.
This idea has been echoed by some of the most influential figures in the business and finance world, including Professor Michael Porter, Michael Lewis, and Warren Buffett. In 1988, he purchased a large stake in the company, seeing its strong brand, steady cashflow, and long-term growth potential.
70% of medium sized companies will change hands (2008). Notice the same predictions from 2008-2015? It’s not reckless money like it was 15 years ago but financing options abound, including for lower middle market and below sized deals. Their average age of retirement is 67. And guess what? Synergistic product line firm.
To help provide a better factual base for this debate, MGI, working with McKinsey colleagues from our Strategy & Corporate Finance practice as well as the team at FCLT Global, began last fall to devise a way to systemically measure short-termism and long-termism at the company level. Earnings quality: Accruals as a share of revenue.
It could represent a hidden vulnerability, especially if backed by domestic currency cashflows derived from overextended sectors, such as property, or used for carry trades or other forms of speculative position-taking. Financing problems of non-financial corporations in EMEs can also feed into the banking system.
Get Involved The State of the Unions Finances: A Citizens Guide. So refraining from any forecast of what will happen in the near term, it’s sufficient to observe that the economic data is not nearly as strong as widely perceived, and the impact of QE on stock prices does nothing to improve the underlying cashflows.
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