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The Morning Ledger: U.S. Firms Unlock Working Capital by Delaying Payments |
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Stanley Black & Decker said its extra cash from delayed bill payments helped fund its purchase of France’s Facom Tools. PHOTO: ERIC PIERMONT/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Good morning. U.S. companies are increasingly delaying payments to suppliers in an effort to free up working capital and redirect it to other areas, such as capital expenditures or acquisitions, write CFO Journal’s Tatyana Shumsky and Nina Trentmann.
The 1,000 largest U.S. public companies increased payment delays to 56.7 days in 2017, up from 53.3 in 2016, according to a study to be released next month by consulting firm The Hackett Group Inc. The research estimates that these companies have nearly $1.1 trillion tied up in inventories, payments to suppliers and payments not yet received from customers.
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Stanley Black & Decker Inc. is among the companies taking longer to pay its vendors. The industrial and household tools maker paid its outstanding bills after 83 days on average last year, and has averaged above two months since 2005, when the company began to employ this tactic.
“It was a partnership,” said Chief Financial Officer Donald Allan Jr. about his efforts to convince vendors to give him more time. “We were saying we’re going to help you be more efficient and effective so you can generate more profit and drive more volume through your system,” he said.
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Accenture PLC, Conagra Brands Inc., Nike Inc. and Walgreens Boots Alliance Inc. are among the companies reporting earnings today.
Thursday is part two of the U.S. Federal Reserve’s annual bank stress tests, when firms will learn whether they can boost buybacks and dividends to shareholders. The WSJ's Liz Hoffman has five things to watch.
The U.S. Commerce Department will release its third estimate for first-quarter gross domestic product and its second estimate for corporate profits at 8.30 a.m. ET. The figures will show whether consumer spending and business investment, among other metrics, were stronger than previously reported. Economists surveyed by The Wall Street Journal expect the first-quarter GDP reading to remain at 2.2%.
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The International Accounting Standards Board, the organization behind International Financial Reporting Standards, on Thursday launched a consultation on IAS 32, a regulation that governs the accounting for issuers of financial instruments. The consultation aims to address concerns about the consistency of the standard in light of new financial instruments, said Sue Lloyd, vice-chair of the IASB.
Since the inception of IAS 32 two decades ago, the range of financial instruments used by companies has grown which is why the standard needs rearticulating, she said. “We want to get more consistency in what is considered as debt and as equity,” Ms. Lloyd told Ms. Trentmann.
Certain financial instruments, for example contingent convertible bonds, did not exist when the standard was written, she added. “There is uncertainty around how to classify coco-bonds under IAS 32,” said Ms. Lloyd. Depending on the outcome of the consultation, the IASB could decide to alter the standard or replace it, she said. The consultation ends in January 2019.
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Comcast is looking at private-equity investors and strategic partners as it seeks additional funds in its battle with Disney for 21st Century Fox assets. PHOTO: MATT ROURKE/ASSOCIATED PRESS
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Comcast Corp. is exploring tie-ups with other companies or private-equity investors that could provide additional cash as the cable giant pursues a costly acquisition of 21st Century Fox Inc.’s entertainment assets, according to people familiar with the situation.
The U.S. Justice Department on Wednesday approved Walt Disney Co.’s proposed $71 billion acquisition of 21st Century Fox Inc.'s assets.
Apple Inc. and Samsung Electronics Co. have settled a yearslong dispute focused on whether Samsung’s phone designs violated Apple’s patents.
Amazon.com Inc. is pushing further onto the turf of its shipping partners United Parcel Service Inc. and FedEx Corp. by enabling small businesses to carry its overflowing supply of packages in the last-delivery leg to the consumer’s door.
Harley-Davidson Inc. is pushing back against complaints from President Trump, workers and dealers who say the company is abandoning its U.S.-made bona fides by moving some production overseas to avoid retaliatory European Union tariffs.
Ford Motor Co. plans to team up with Chinese internet-search provider Baidu Inc. to develop new artificial-intelligence technology and digital services.
Sempra Energy is pivoting from alternative energy and selling its wind and solar assets in the U.S., along with some natural-gas assets. It expects to take an impairment charge of as much as $925 million.
Lyft Inc. said on Wednesday it raised $600 million in a new funding round led by Fidelity Management, doubling the ride-hailing firm’s valuation to $15.1 billion in little over a year, reports Reuters.
General Mills Inc. expects to have cut up to 625 jobs by next spring as the maker of Cheerios and Nature Valley granola bars looks to reduce costs amid challenges with its yogurt and baking products.
Hennes & Mauritz AB reported a sharp drop in second-quarter profit as the owner of the world’s biggest clothing brand struggled to shift a mountain of unsold stock.
Sanofi SA said Thursday it had finalized negotiations to sell its European generics business Zentiva to Advent International Corp. for €1.9 billion ($2.2 billion).
Global dealmaking has reached $2.5 trillion in the first half of 2018, breaking the all-time high for the period, reports the Financial Times.
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The Supreme Court building in Washington, D.C., U.S. PHOTO: J. SCOTT APPLEWHITE/ASSOCIATED PRESS
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The U.S. Supreme Court in a 5-4 vote barred public-employee contracts requiring workers to pay union dues, dealing a severe blow to perhaps the strongest remaining redoubt of the American labor movement.
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The New York attorney general’s office is investigating how T-Mobile US Inc.’s $26 billion deal to buy Sprint Corp. could impact competition in the pay-as-you-go wireless market, according to people familiar with the matter.
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The U.S. Food and Drug Administration is dialing up pressure on big internet companies to do more to prevent online sales of opiods.
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A group representing users of imported steel has filed a lawsuit claiming a law that allowed President Trump to penalize imports of steel and aluminum improperly delegates trade powers to the executive branch in violation of the Constitution.
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Equifax Inc. must improve how it manages cybersecurity risk, regulators from eight states said Wednesday, responding to a 2017 data breach that exposed the personal data of nearly 148 million consumers.
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The Port of Los Angeles handled more than 3.5 million containers in the first five months of 2018, a 4.4% decline from the same period a year ago. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS
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Leaders at big U.S. seaports say escalating global trade tensions could drive down cargo volumes at the gateways and hit jobs and businesses that depend on the flow of goods across supply chains.
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U.S. durable goods orders fell a seasonally adjusted 0.2% in May after a strong April increase, in a sign that business investment in equipment is not accelerating after lawmakers in Washington overhauled the tax system with the intent to spark such spending.
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The rapidly deteriorating trade and investment relationship between Washington and Beijing is sending a further thrill through Chinese dealmakers, who so far this year spent just $1.6 billion on U.S. assets, down almost 80% from the year-earlier period, according to Reuters.
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Businesses across the eurozone remained upbeat about their prospects in June, even as new tariffs were imposed on trade between the European Union and the U.S., with fears that more will follow.
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China’s central bank guided the yuan to its weakest value against the dollar in more than six months Thursday, the latest leg down for the Chinese currency in a slide that has gathered pace this week.
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Australia’s conservative government has shelved plans to cut company taxes after failing to secure enough support from small parties in the country’s minority upper house Senate, reports Reuters.
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