Value Investing U.S. Retailers Plan to Stop Paying Rent to Offset Virus |
- U.S. Retailers Plan to Stop Paying Rent to Offset Virus
- Operating Leverage vs. Incremental Margins clarification please?
- The Rise of Private Markets - Secular Trends in Non-Bank Lending and Their Economic Implications
- Greenblatt's magic formula in times of COVID-19?
- What has caused the fed fund rate to decline over time?
| U.S. Retailers Plan to Stop Paying Rent to Offset Virus Posted: 26 Mar 2020 07:53 PM PDT |
| Operating Leverage vs. Incremental Margins clarification please? Posted: 27 Mar 2020 06:22 AM PDT I've always thought of incremental margins and operating leverage as the same thing - how much incremental profitability (or loss) for a 1$ increase (or decrease) in sales. For example, I sell a 100 widgets for $1 each so my total sales are $100. It costs me $0.5 in variable costs to produce each widget and I pay $25 in rent. So my profit is $25, and my margin is 25%. Say I sell 10 more widgets, my total sales now are $110, and my costs are $80 (since my rent fixed cost is flat) - new profitability is $30, and my margins are ~27.3%. Operating leverage here is [change in OP/change in sales] = $5/$10 = 0.5 (or 50% incremental margin). However, I've recently come across the use of "incremental margins" in a slightly different context at work, and this doesn't seem right to me but I cannot identify why. Using the same example above: Incremental margin is the increase in margin (not $value of profit), divided by the change in sales. So for our widgets, a 10% increase in sales (100 to 110) results in a ~2.3% (~27.3%-25%) increase in margin, giving us 2.3%/10% = ~23% incremental margin. Again, I think the second method doesn't quite make sense given that you would rather look at the absolute or $ value change as a % change will continue to vary when the revenue base is different - does that make sense? Or do you think there is some utility to looking at incremental margins via method 2? Any thoughts would be helpful - thanks! [link] [comments]  |
| The Rise of Private Markets - Secular Trends in Non-Bank Lending and Their Economic Implications Posted: 27 Mar 2020 03:37 AM PDT |
| Greenblatt's magic formula in times of COVID-19? Posted: 26 Mar 2020 11:47 AM PDT Hey guys, how do you feel about revisiting the Magic Formula screener in this environment? (https://www.magicformulainvesting.com) I suppose that given that the formula uses return on capital from last year and current share prices there should point to some nice bargains. What do you think? [link] [comments]  |
| What has caused the fed fund rate to decline over time? Posted: 26 Mar 2020 01:46 PM PDT What are the mechanics of why the short term interest rate has been in steady decline since the 80's? It seems that when times are good, the fed sets the rate to stave off inflation (and more recently, to also reach peak employment). In bad times, they drop the rate to encourage economic activity. All that makes sense to me, but why has it trended down for such a long history of time? Is it that the Fed didn't have everything quite figured out in the 80's and that was the sort of the outlier time period? Were we always headed to a near zero / low rate paradigm? What would be something that could kick start a trend in the other direction? Obviously inflation would be one thing. But even with record money printing, we really haven't seen a blip. [link] [comments]  |
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