A recent Wall Street Journal article highlights the operating leverage for several auto manufacturers. For example, BMW lost €666 million ($784.1 million) during the most recent quarter. A large part of the loss was due to the company's operating leverage. BMW loses $.43 for every dollar of lost sales, which of course means that the company gains $.43 for every increased dollar of sales. By way of comparison, Fiat Chrysler's operating leverage is about 18%, GM's is about 20%, and Ford's is about 25%. As a result, we would expect BMW's earnings to be more volatile when compared to other auto companies.
Sunday, August 9, 2020
Sunday, August 2, 2020
Currency Fluctuations Damage Earnings
In its latest report, Kyriba estimates that North America companies earnings fell by $10.77 billion
due to currency fluctuations last quarter. The most common currencies
affecting earnings were the Brazilian real, the euro, and the Mexican
peso. The industry that was most affected was Healthcare Equipment &
Supply. In contrast, European companies had a negative earnings impact
of $1.44 billion.
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