A Discussion Of Markets

Alvin Roth, the co-recipient of the 2012 Nobel Prize in Economics, is an expert on markets. In a recent interview, he discusses stock market, as well as other markets such as Amazon and eBay. The interview touches many topics, including more inefficient markets such as the real estate market.

Darden Split

Darden Restaurants was in the news last year when its Board was effectively fired. Yesterday, the company made a big announcement to split up. More than 430 of the company's restaurants will be spun-off as a real estate investment trust (REIT). The company will then lease the restaurants back from the REIT. Additionally, the company will execute a sale and leaseback on 75 individual restaurants. The plan is expected to allow Darden to pay off about $1 billion in debt.

2015 Working Capital Survey

CFO just published the 2015 working capital survey by REL Consulting. The 967 large U.S. companies included in the survey had $1.0541 trillion in excess working capital. However, low interest rates appear to have led to a level of apathy in working capital management as very little improvement has been seen in the past year. Overall, the companies in the survey have increased total debt by 62 percent since 2007, and the cash balance at these same companies reached $932 billion, a 74 percent increase since 2007. Even with cheap debt, days' sales outstanding increased by one day, from 37.4 days to 36.4 days, although much of this was a one-time improvement in the gas and oil industry.

The best performer in the cash conversion cycle was Anadarko Petroleum with a negative 346 days due to a paypables period of 397 days! Some of the other top performers in the cash conversion cycle were Deere (negative 29 days), Southwest Air (negative 17 days), Intuit (negative 81 days), and SunEdison (negative 52 days). On the other end of the performance scale, some of the longest cash conversion cycles were at Toll Brothers (770 days), Boeing (202 days). FLIR systems (207 days), and Tiffany (494 days).

George Zimmer Guarantees It

Proving you can't keep a good entrepreneur down, George Zimmer, the founder of Men's Wearhouse  who was let go in 2013, is back. In order for you to like the way you look now, Zimmer as started a new business, zTailors. Calling the business the Uber of the tailor world, you can use the app to set up an appointment with a tailor who comes to meet you, take your measurements, and then brings your clothes back in 5 to 7 days. Zimmer expects the cost of the tailor to be comparable to current cost of going to a tailor.

Mark-To-Market Accounting And FedEx

FedEx announced that it would take a $2.2 billion charge as it would be changing the way it accounted for pensions. The company will use mark-to-market accounting for the assets in its pension account moving forward. Mark-to-market accounting means that the assets are recorded at "fair value", or market value, rather than historical value.

Currency Losses Hit Record

Companies in North America lost a record $28.94 billion in the first quarter of 2015 due to currency fluctuations. The loss was an increase of 55.1 percent from the previous quarter. Of the 820 North American companies analyzed, 279 reported currency losses, with the euro the most commonly cited currency. On average, currency losses reduced EPS by 8 cents.