Underlying Gearing Ratio HY2012
Quote:
Originally Posted by
percy
Jeff Greenslade has laid the foundations for a great company.Ticked all the boxes.We are "very well positioned" to reap the full financial benefits that will be generated.
I guess the gearing ratio would be one important numerical foundation of a company. So how does HNZ stack up?
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Criterion 3/ Gearing Ratio (Total non-risk share liabilities to total non risk tangible assets) < 90%
Once again we look at p12 ('Interim Statements of Financial Position') where we can find the underlying debt of the company: $34,808,000.
To calculate the total underlying company assets we have to (at least) subtract the finance receivables from the total company assets. I would argue that you should also subtract the problem 'Investment Properties' and the unspecified 'Investments' from that total:
$2,380.54m - ($2,075.21m +$58.08m + $24.31) = $222.94m
By contrast the Vehicles on lease should be readily saleable so for this exercise I would count those as non-risk assets.
We are then asked to remove the intangible assets from the equation as well:
$222.94m - $21.98m = $200.96m
Now we have the information needed to calculate the information asked for:
$34.8m/$200.96m= 17.3% < 90%
Result: PASS TEST
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So perhaps Jeff Greenslade is right?
SNOOPY
The Adequate Capital Question
Quote:
Originally Posted by
Snoopy
So perhaps Jeff Greenslade is right?
I have had a conceptual problem with this question for a while, so this might be the time to lay the cards I have on the table, using Heartland as an example.
Criterion 3 shows that Heartland's core assets: offices staff and the tools they need to do their job, are quite conservatively financed with plenty of capital.
Criterion 5 shows that in relation to the business and home loans outstanding on the books, Heartland is if anything quite short of capital.
So, does Heartland have adequate capital or not?
SNOOPY