Corporate Finance

Finance Roundup for Executives: April 18, 2016

Be informed, get involved, and shape the world through finance. Read's most recent headlines and standout stories.
Kerry MarunaApril 18, 2016

Standout Stories

Better business for restaurants… Lower operating costs and stronger consumer demand will bolster top-line growth and operating income for the U.S. restaurant industry this year, said Moody’s Investors Service in a report released Thursday.

The credit rating firm said steady economic growth, a decline in under-employment, lower gas prices, and a rising minimum wage will have U.S. consumers dining out more. As a result, the firm raised its outlook for the industry to “positive” from “stable.” Combined with lower commodity prices, consumer demand factors also caused Moody’s to increase its forecast for operating income for the sector. Income will grow 5% to 6% over the next 12 to 18 months, says Moody’s, up from its previous call of 2% to 4% growth. Read article

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Enterprise risk management strategy… Imagine this scenario. Your company was led by its external auditors several years ago to put in place an enterprise risk management (ERM) program. Its implementation has progressed at a slower pace than you’d expected, mostly because your operational managers perceive ERM to be just another compliance exercise. As the CFO, you’re starting to question its overall value, and whether it makes sense to continue committing resources to the effort. Thankfully, there is an upgrade of ERM that could have a material, positive impact on future financial performance: strategic risk management, or SRM.

What’s the difference between the two processes? In theory, SRM is an advancement of ERM, which itself builds on established, traditional methods of managing risk in silos, buying insurance, and spending on loss control. Importantly, ERM sets the stage for minimizing not only the downside loss potential of risk in a more sophisticated, holistic manner, but also enables firms to begin to consider how to gain added value through risk management. Read article

$1.5 million trading scheme… A former analyst at a New York hedge fund has been charged with making $1.5 million in illicit profits by trading on inside information about an impending takeover.

The U.S. Securities and Exchange Commission said John Afriyie, 28, used his access to “highly confidential” information about the buyout of home security firm ADT Corp. by Apollo Global Management to purchase ADT stock options in his mother’s brokerage account. Read article


Fed Survey Shows Wages Picking up in U.S.

Wage growth and signs that the oil industry may be emerging from its decline were two of the bright spots in the Fed’s latest “Beige Book.”


PCAOB Proposes Changes in Audit Supervision

The proposal is intended to make it easier for lead auditors to spot deficiencies in the work of outside auditors.


Wells Fargo’s Q1 Profit Falls

The banking giant was forced to add $200 million to loan-loss reserves as its oil and gas portfolio deteriorated.


On the Menu for Restaurants: Higher Earnings

Revenue and operating income for U.S. restaurants will increase more than expected, said Moody’s Investors Service in upgrading its industry outlook.


Analyst Charged in $1.5M Trading Scheme

A former analyst at a New York hedge fund traded on information about Apollo Global Management’s buyout of ADT.


U.S. Consumer Prices Inched Upward in March

Inflation pressures remained modest, despite a 2.2%, 12-month increase in core prices.


Delphi Escapes U.S. Taxes on Worldwide Profits

The IRS Office of Appeals found that the automotive supplier should not be treated as a domestic corporation for U.S. federal income tax purposes.


Oil Price Slump Puts Energy XXI in Chapter 11

The company believes it has sufficient liquidity, including about $180 million of cash on hand as of March 31, to continue operations.


Tax Bill for Many Companies Comes to Zero

A GAO report prepared for Bernie Sanders shows two-thirds of corporations paid no federal income tax in a six-year period.


CFOs on the Move: Week Ending April 15

Revlon, Red Lion Hotels, Cracker Barrel, Workday, IAC, H.B. Fuller, LCH, Universal Truckload, Triumph, CNO Financial


N.Y. Town Officials Accused of bond Fraud

Prosecutors say it is the first criminal case to allege accounting fraud against city officials in connection with the sale of municipal bonds.


When Enterprise Risk Management Gets Strategic

By moving enterprise risk management up into the strategic realm, CFOs can boost the value of their companies.


Citi’s Q1 Revenue, Earnings Beat Expectations

The bank believes it is on the right track for the long term as it restructures to focus on more profitable businesses.


U.S. Industrial Outpost Drops 0.6% in March

The larger-than-expected decline in production is more evidence that economic growth has cooled since the start of the year.


Goodrich Petroleum Files Chapter 11

The oil and gas producer has an agreement with bondholders to eliminate about $400 million in debt from its balance sheet.


Canada’s Mitel to Buy Polycom for $1.8 Billion

The merger of the two telecom equipment providers was encouraged by an activist investor with stakes in both companies.


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