Author: Created: 1/22/2011 11:26 PM
Blogs and discussions about investment analysis.

How to Calculate Gross Returns From Dividend Payments

By David Press on 3/16/2011 12:25 PM


  Australia's dividend imputation system is in place to prevent double taxation of company earnings and has been applauded by Australian investors since it's implementation in the 1980's. However it does mean that investor's need to perform a simple calculation in order to obtain the real return of their dividends when considering the franking credits applied. My recent blog on BHP's share buy back has resulted in a number of questions from fellow investors on how to calculate the real return from dividend payments, so I thought I'd post up a quick blog explaining it in simple terms.

 

The reasoning behind calculating the 'grossed' or 'franked' up returns (I actually prefer these terms given 'real return' actually requires inflation to be...
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Why Using EBITDA Can Be Misleading To Long Term Investors

By David Press on 2/6/2011 8:22 PM


Earnings before interest, tax, depreciation and amortisation (EBITDA) is a very common measure used by many listed companies in their earnings reports, guidance announcements and other public announcements (often in reference to mergers and acquisitions made as well as divestment). Analysts and investors also use the measure in a variety of ways in their analysis of both private and public companies in order to make investment decisions. Although it certainly has it's place, particularly when used as a measure of a companies ability to finance debt (debt coverage ratio), I am always concerned by the overuse and misuse of it as a measure by investors, leading to miscalculation of a company's worth and potential loss.

 

The major risk associated with long term investors using EBITDA as a measure of cash flow, is that in reality, tax and interest (assuming...
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Why I Use Return on Equity as a Key Performance Measurement

By David Press on 12/7/2010 2:35 AM


Having published a number of blogs of late mentioning Return on Equity (ROE) and intrinsic valuations (HSN and DDT, I thought it a good idea to briefly discuss why we are using ROE as a key measurement of performance.

 

It revolves around the quite simple notion that a rational investor should desire an adequate return on the money they have invested, to make up for the additional risk they take by investing in a business. The ROE figure reveals the return management have achieved on shareholder funds/capital/equity, and therefore gives a return on what you are...
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Re: Why Using EBITDA Can Be Misleading To Long Term Investors
A very useful write-up indeed. Investors, especially long term investors do tend to use EBITDA for an easy cash flow measurement, but as it doesn’t consider aspects inventories and receivable accounts, they do not get the complete idea of the financial condition of the company, which sometimes cost them hugely. So, I think it’s a good idea to analyze of the historical operations as well as future projections of the company while computing EBITDA. That can be really helpful.
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Re: How to Calculate Gross Returns From Dividend Payments
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