Posts Tagged money problems
Fundamental models for loans spreads
Posted by admin in Companies, Money Tips, consulting, credit, liability, management skills, manufacturing, material costs on October 25th, 2009
A popular approach to estimate the credit risk of an issuer is the use of z-scores. In this context, Altman’s five components framework has attracted particular interest. On the company level, it is based on the five metrics.
Replacing the company-specific metrics by macroeconomic factors yields a fundamental model for the credit market. Because of the required minimum history and data reliability we will focus on the US market. Data for this procedure is taken from the flow of funds statistics and the national accounts of the United States.
The ratio of working capital to total assets measures the net liquid assets of a firm relative to the sum of financial and tangible assets. We isolated net liquid assets for the US nonfinancial corporate sector from the flow of funds statistics by subtracting mortgages, consumer credit, trade receivables and miscellaneous assets from total assets and subsequently adding inventories, trade and tax receivables.
The large fall in 1974 is due to a significant decline in the value of trade payables. Usually, the ratio of working capital to total assets falls in a recession. But there also seems to be a secular downtrend in this ratio.
Real Estate and Tax (Dis)Advantages
Posted by admin in Uncategorized on April 23rd, 2009
Investing outside of the United States adds another tax dimension, so it’s a good idea to understand the tax codes of the country that you are investing in. When determining whether an investment property will generate positive cash flow, you must include the tax implications of the income in your calculation, because U.S. taxpayers are taxed on their worldwide income. You should also take into account that there are certain legal tax advantages available in the United States when investing in property. For example, you can acquire investment property with your retirement funds, which offers tax-free or tax-deferred opportunities, or you can make tax-deferred 1031 exchanges of like-kind property. Some of these tax advantages are not available outside the United States. You cannot do a 1031 exchange for property outside the United States. You can, however, invest selfdirected Individual Retirement Accounts (IRAs) and 401(k) money everywhere, but you may still be obligated to pay taxes in another country. For instance, with a Roth IRA, you pay tax once and then any profits made are tax free—tax free forever in the United States, that is. It does not mean they are tax free outside of the United States. No country outside the United States recognizes American retirement plans and so local taxes may apply.