Global: Peaking net profit margin for Large and Medium companies, tough time for Small
Q4 hedge fund letters, conference, scoops etc
- Looking at all non-financial companies globally, grouped by size
- Large and Medium companies are seeing peaking net margins
- Small companies have had a tough time with negative margin in the past three years
Global: Falling efficiency due to malinvestment
- Fall in asset turnover hasn’t come from higher asset growth, but lower sales
- Following the Global Financial Crisis (GFC), low-interest rate policies have led to malinvestments among corporates
- Small companies have seen the largest fall in efficiency
Global: Cash conversion cycle shows vulnerability to a credit crunch and/or economic slowdown
- Cash conversion cycle (CCC) has risen for all companies following the GFC, but most for Small and Medium companies
- The high CCC means that companies are more vulnerable to a credit crunch and/or economic slowdown
Article by Become A Better Investor
