Budget

[ajohn]

Your missing PE.. Lots of big employers are not listed.

Yes forgot that lot. Interesting report

Top Track 100 - Britain's Top 100 private companies | Insights | Linklaters

Now in its 19th edition, this year’s analysis shows how Britain’s top 100 biggest private companies delivered a record combined sales of £237bn in their latest full year of trading, and before Covid-19 struck – and generated record profits (ebitda) of £28bn. They employed 980,000 people...

www.linklaters.com

Some snippets
Now in its 19th edition, this year’s analysis shows how Britain’s top 100 biggest private companies delivered a record combined sales of £237bn in their latest full year of trading, and before Covid-19 struck – and generated record profits (ebitda) of £28bn. They employed 980,000 people, equivalent to 3% of the UK’s workforce.

More than two thirds (69) grew their profits year-on-year, although 29 saw a fall in ebitda, and two chose not to disclose their profits. Total profits were up 7% to £28.2bn while margins at ebitda level remained steady at 12%

Total combined debt (including shareholder debts) among the 97 companies that disclosed figures is at least £126bn, resulting in an average debt multiple of four and a half times ebitda. Twenty-three of the companies have debt of more than £1bn, while 33 have debt of more than five times ebitda

Of the 10 companies with the highest profits, six have debt of more than £3bn and pay out a large proportion of their profits in interest. Four of the six are owned by private equity

Profit relates to tax take. I'm not sure what the following means in this respect

Example of EBITDA ​

Suppose a company generates $100 million in revenue and incurs $40 million in cost of goods sold (COGS) and another $20 million in overhead. Depreciation and amortization expenses total $10 million, yielding an operating profit of $30 million. Interest expense is $5 million, leaving earnings before taxes of $25 million. With a 20% tax rate, net income equals $20 million after $5 million in taxes is subtracted from pretax income. If depreciation, amortization, interest, and taxes are added back to net income, EBITDA equals $40 million.

 

[JohnD]

EBITDA is an exaggerated number intended to trick investors into think the company is doing well.

It means "the profit we would have made if we didn't have these costs"

 

[motorbiking]

Good grief. Where did you get that nonsense from?

EBITDA is one of the main financial indicators for a company that is growing, to show that it is growing a healthy, profitable business.

 

[JohnD]

It means "the profit we would have made if we didn't have these costs"

Is what it is.

 

[carmanmemoranda]

It means "the profit we would have made if we didn't have these costs"

Which means any failed business could have been a sucess

 

[ajohn]

The way to do that is to tax wealth more

Both Labour and Tory see another way. Productivity increases = less jobs so more can be needed. Problem solved in terms of running the country but investments are needed. Only catch is more productivity needs market size to increase.

The FED noticed that corporate profits had increased from the usual 12 1/2% to 15. I assume this is an average. What to do?

Tax just the very high income lot and as there aren't that many of them the increase needed can be large. So we finish up with a set up where the 3 main sectors pay ~30% each with decreasing numbers of people going up the scale. MBK reckons 300 in the top 1%. Poverty is part taken care of by the lowest sector plus gov handouts for some.

I think a more progressive tax system would help. We have set levels were tax rates change. It's possible to cause them to move smoothly as income levels increase. Some would pay more so getting elected to do this would be tricky. The US does it via lots of levels and Germany via maths.

Mrs T came to grief on indirect tax. Poll Tax. It was applied to individuals that were working rather than houses. The press treated it like a lead balloon. Same with the death tax as it was called and mentioned more recently. Some countries use area taxes.

 

[ajohn]

EBITDA is one of the main financial indicators for a company that is growing, to show that it is growing a healthy, profitable business.

The gov may well tell them to produce a proper balance sheet. From the separate cut and paste I posted

EBITDA is not a metric recognized under generally accepted accounting principles (GAAP). Some public companies report EBITDA in their quarterly results along with adjusted EBITDA figures typically excluding additional costs, such as stock-based compensation.
Increased focus on EBITDA by companies and investors has prompted criticism that it overstates profitability. The U.S. Securities and Exchange Commission (SEC) requires listed companies reporting EBITDA figures to show how they were derived from net income, and it bars them from reporting EBITDA on a per-share basis.

EBITDA: Definition, Calculation Formulas, History, and Criticisms

EBITDA, or earnings before interest, taxes, depreciation, and amortization, is an alternative measure of a company's overall financial performance.

www.investopedia.com

 

[blup]

Accountants are more flexible than lawyers, shifting costs exaggerating profit hiding losses, its a big often international con

 

[ajohn]

There is a list of them here

https://lpscdn.linklaters.com/-/media/files/insights/2020/july/2-2020-top-track-100-league-table.ashx?rev=7bb11d41-f1d6-4a84-9f71-06e7bf08783d&extension=pdf

Looking on company house the do provide conventional accounts details. I just looked at the audit report on one.

They can get bought up eg Boots. There maybe some rich booties around.

 

[motorbiking]

The gov may well tell them to produce a proper balance sheet. From the separate cut and paste I posted

EBITDA is not a metric recognized under generally accepted accounting principles (GAAP). Some public companies report EBITDA in their quarterly results along with adjusted EBITDA figures typically excluding additional costs, such as stock-based compensation.
Increased focus on EBITDA by companies and investors has prompted criticism that it overstates profitability. The U.S. Securities and Exchange Commission (SEC) requires listed companies reporting EBITDA figures to show how they were derived from net income, and it bars them from reporting EBITDA on a per-share basis.

EBITDA: Definition, Calculation Formulas, History, and Criticisms

EBITDA, or earnings before interest, taxes, depreciation, and amortization, is an alternative measure of a company's overall financial performance.

www.investopedia.com

I prefer Cash EBITDA, particularly in high IP companies, where the order book can't be recognised until the value is delivered. You will find most execs growing software/high techs particularly Software as a Services companies have targets for Cash adjusted IBITDA. That and staying in the Rule of 40 is literally all they will be focused on.

There is clearly a difference between firm A. who signs several $10M ramped 10 year deals and firm B who signs some 1 year $1M deal. Firm B would have the "better" accounts, due to revenue recognition rules. If firm A had up front costs associated with the delivery it would look "very bad" according to people who didn't understand how these businesses work.

Which means any failed business could have been a sucess

What people are trying to separate is the cost associated with growth and the cost associated with doing business. If you allow growth costs to dilute business costs, you might think a business that is doing very well is failing, because it is choosing to invest its profits in its growth.

Amazon.. a hugely successful company would seem to be very unprofitable and likely to fail, according to your interpretation.

 

[JohnD]

Companies that are making a substantial loss, and collapse into insolvency, can have a very glamorous EBITDA and tell an optimistic tale..

Smoke and mirrors.

A good clue is tax paid on profits.

 

[carmanmemoranda]

Companies that are making a substantial loss, and collapse into insolvency, can have a very glamorous EBITDA and tell an optimistic tale..

Smoke and mirrors.

A good clue is tax paid on profits.

Exactly

 

[carmanmemoranda]

I prefer Cash EBITDA, particularly in high IP companies, where the order book can't be recognised until the value is delivered. You will find most execs growing software/high techs particularly Software as a Services companies have targets for Cash adjusted IBITDA. That and staying in the Rule of 40 is literally all they will be focused on.

There is clearly a difference between firm A. who signs several $10M ramped 10 year deals and firm B who signs some 1 year $1M deal. Firm B would have the "better" accounts, due to revenue recognition rules. If firm A had up front costs associated with the delivery it would look "very bad" according to people who didn't understand how these businesses work.


What people are trying to separate is the cost associated with growth and the cost associated with doing business. If you allow growth costs to dilute business costs, you might think a business that is doing very well is failing, because it is choosing to invest its profits in its growth.

Amazon.. a hugely successful company would seem to be very unprofitable and likely to fail, according to your interpretation.

If you can't tell that from the accounts then you need better accountants

 

[motorbiking]

You two are hilarious..

The whole point is that the order book isn't recognised revenue. But I'm not wasting my time explaining it. Keep making 5-10% on your bluechips.

 

[carmanmemoranda]

You two are hilarious..

You do understand accounts ?