Commercial Collections Blog

A corporation’s earnings report can have a devastating effect on its stock price if earnings just barely fail to meet the company’s projections. If a company misses its earnings estimates by only a penny a share, investors may hammer its stock, thinking that the company would have used every accounting trick in the book to meet the projections. Therefore, the reasoning goes, missing projections by a penny a share must mean trouble’s a-brewing. Such pressure from Wall Street can force companies to do anything to meet short-term earnings targets, possibly at the expense of longer-term growth. In one survey of more than 400 financial executives, about 80% of the respondents said that they would cut discretionary spending on things like research, development and hiring in order to rein in costs, meet projections and satisfy Wall Street’s demands for hitting quarterly earnings targets.
Some have suggested that companies should stop putting out estimates of quarterly earnings and perhaps instead provide more meaningful communication for investors to understand longer-term business strategies.

Technorati Tags commercial business

An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today—Laurence Peter

By working faithfully eight hours a day you may eventually get to be boss and work twelve hours a day–Robert Frost

Every day I get up and look through the Forbes list of the richest people in America. If I’m not there, I go to work.–Robert Orben

Failure doesn’t mean you are a failure, it just means you haven’t succeeded yet.–Robert Schuller

For a lot of people, the weekly paycheck is “take-home pay” because home is the only place they can afford to go with it.–Charles Jaffe

Technorati Tags commercial business

Below is the system of credit ratings that Standard & Poor’s applies to bonds. Ratings can be modified with + or – signs. So an AA- is a higher rating than an A+ rating. With such modifications, BBB- is the lowest investment-grade rating. Other credit rating systems are similar.

AAA Best credit quality; extremely reliable with regard to financial obligations

AA Very good credit quality; very reliable

A More susceptible to economic conditions; still good credit quality

BBB Lowest investment-grade rating

BB Caution is necessary, best sub investment credit quality

B Vulnerable to changes in economic conditions; currently showing the ability to meet its financial obligations

CCC Currently vulnerable to nonpayment; dependent on favorable economic conditions

CC Highly vulnerable to a payment default

C Close to or already bankrupt; payment on the obligation currently continued

D Payment default on some financial obligations has actually occurred

Technorati Tags commercial business