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12-06-2013, 03:59 PM
Asset Light Businesses?
Investopedia explains 'Asset-Light Debt'
A company may use this strategy by creating a a holding company. The company would then use the holding company to issue debt and pay off the debt through dividends from the original company.
So the mother company has very little debt, therefore high "ROE"
Many extinct fraudulent companies of USA, had made use of this "trick" to cook their books. So be careful of companies that has one too many holding companies.
Investopedia explains 'Asset-Light Debt'
A company may use this strategy by creating a a holding company. The company would then use the holding company to issue debt and pay off the debt through dividends from the original company.
So the mother company has very little debt, therefore high "ROE"
Many extinct fraudulent companies of USA, had made use of this "trick" to cook their books. So be careful of companies that has one too many holding companies.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.