Measuring leverage in banks, insurance companies and non-financial companies

Debt

Companies use leverage because it can boost earnings, and that’s a good thing. But leverage is also bad because it increases the volatility of earnings and increases the risk of bad things happening such as rights issues, dividend cuts and bankruptcy. The trick is to find companies with the “right” amount of leverage given your […]

Taking account of return on capital employed

Investment Analysis

The return generated by the capital employed within a business can be a useful guide to its competitive strengths, and whether the company’s management are chiefly interested in enriching themselves or shareholders. Return on capital employed in a competitive market Picture the following scenario: You decide to set up a company which will run a […]

Case study: Investment in Greggs PLC shares returns 30% in less than 2 years

Selling greggs plc chart 2014 10

In December 2012 I invested 3.4% of the UKVI defensive value model portfolio into Greggs PLC and also added it to my personal portfolio too with a similar allocation. Last week I sold those shares for an annualised return of 15.8% per year over that slightly less than 2 year period. This short case study […]

A course on investing on the stockmarket

Piggy Bank

Sensible educational courses on how to invest on the stockmarket are few and far between, which is why I’m happy to promote a new course which will be available soon at the Robertsbridge Community College in East Sussex. Investing on the Stockmarket The course will provide guidance for those who wish to take control of their financial […]