In many cases, capital investments are a necessary and normal part of an industry. Consider an oil-drilling company that relies on heavy machinery to extractraw materialsto be processed. As opposed to a law firm that will have low-to-no capital investment requirements, capital-intensive businesse...
Note from the examples that one was of a capital-intensive company and the other was not. Therefore, it would not be effective to compare these two companies to each other, because it doesn’t give you clear insight as to the effectiveness of either company’s use of capital. The best w...
A high capital intensity ratio may be due to lower utilization of the company's assets or it may be because the company's business is more capital intensive and less labor intensive (for example, because it is automated). However, for companies in the same industry and following similar ...
Return on capital employed can be especially useful when comparing the performance of companies in capital-intensive sectors, such as utilities and telecoms. This is because, unlike other fundamentals such asreturn on equity(ROE), which only analyzes profitability related to a company’s shareholders...
This paper presents an innovative flexibility analysis as a practical, effective procedure to improve the expected value of large-scale, capital-intensive projects when there is market uncertainty. Its novelty lies in its approach and scope. Its approach develops understanding of the drivers of the ...
A key characteristic of Utility companies is that they are Capital Intensive Model with steady cash flows and high levels of debt in the balance sheet. As a result, we can apply P/CF to value Utility companies. The table below provides us with Price to Cash Flow ratios (TTM) of top Uti...
The Heckscher Ohlin Model is a mathematical model explaining that countries should export production materials of which they have an excess.
The theoretical framework underlying this approach is based on concepts of natural capital and ecosystem hierarchy, and highlights the role of natural capital in providing ecosystem services such as nutrient and water cycling and C sequestration, which may be lost or reduced in intensive agricultural ...
Example of Bridge Financing Bridge financing is quite common since there are always struggling companies. It can also be more prevalent in capital-intensive sectors. For example, the mining sector is filled with small players who often use bridge financing in order to develop a mine or to cover...
Business Accounting of Sinking Funds A sinking fund is typically listed as anoncurrent asset—or long-term asset—on a company's balance sheet and is often included in the listing for long-term investments or other investments. Companies that arecapital-intensiveusually issue long-term bonds to ...