Reserve Bank of India (RBI) has de-registered 31 non-banking finance companies including Margadarsi Finance Session Pvt. During the one-hour session, CFN hosts and panelists reviewed opportunities in several finance sectors (from investment banking to private equity) and provided step-by-step guidance on how students can sell themselves and convince prospective employees to extend an offer-for the summer or for full-time employment. For the benefit of MBA finance students, Karuiki explained the primary difference between venture capital and investment banking. There are two main types of insurance companies: general insurance and life insurance.
In business school, however, they seldom immerse themselves in subject matter that addresses the intricacies and complexities of companies taking on debt. Or they take it for granted (take for granted that companies can borrow when they need financing to support growth and take for granted that companies can make payments in timely fashion). Some analysts prefer companies avoid debt altogether or dismiss how debt can be a vehicle that leads to higher returns on equity. Other companies (Dell and Verizon, e.g.) resort to debt to finance large acquisitions.
The ratio presumes earnings are not necessarily available for dividends, new investments and capital expenditures—an unrealistic scenario for many companies. Debt capacity” can be a marketing tool for bankers in discussions with clients who contemplate new debt to finance growth, new investments or planned expansion. At least companies (and the analysts who assess them) have ways to get more comfortable with that elephant in the room, tame it and use it to gain advantages to shareholders.
MBA’s, who have labored in finance courses and are headed into long careers in corporate finance, know all about them. Analysts, associates, researchers, and deal-doers at investment banks, corporate banks, private-equity firms, and asset-management companies are smothered by them. They use popular ratios and calculations to describe the financial health of the companies they analyze. As companies (borrowers) grow globally, expand and become more complex, analysts must be willing to adapt and change their ratios and financial models to find the best way to capture the essence of financial performance.
The most notable reaction has been analysts wondering out loud whether Google reorganized itself into a West Coast version of Warren Buffett’s Berkshire Hathaway, a holding company with a large portfolio of large, diverse companies. For bankers and corporate finance officers, we wonder what impact all this will have on deal flow, corporate transactions, and companies’ willingness to invest in new projects and business growth over the next six months.