PE Ratios and Dividends Around The World

According to FactSet, the country with the lowest PE ratio is Russia at 5.22 times, while Mexico has the highest PE at 26.90 times. The PE ratio in the U.S. is about 15.20 times. In addition to Russia, Italy and New Zealand are the only countries with single digit PE ratios, while Mexico has the only PE ratio above 20. India's stock market has a dividend yield of 1.33 percent, while Spain's average dividend yield is 8.43 percent. By way of comparison, the average dividend yield on U.S. stocks is 2.18 percent.

No Greek Haircut

German Finance Minister Wolfgang Schaeuble announced that a "haircut", or restructuring, of Greek debt would not be possible. The Greek government had asked for a haircut on the country's debt, in this case a by reducing in the coupon rate and extending the maturity of Greece's debt. Schaeuble stated that refunding, or buying back outstanding bonds and replacing them with new debt, was a possibility.

Microsoft Wins Treasury Award

Microsoft has more than $1 billion in cash flowing through the company each day, so working capital management is a very important task. Recently, the company was awarded the Alexander Hamilton award by Treasury and Risk. Microsoft's working capital team worked on ways to improve cash forecasting. The team was able to reduce forecasting variances by 50 to 70 percent each month, resulting in a drop of over $200 million in the cash balances of subsidiaries.

Crowdfunding A Startup

A new potential source of financing for small businesses seems to be growing closer to reality. Crowdfunding, or small investments by many individuals, was part of the JOBS Act, which was enacted in April 2012. The new law will allow individual investors to invest in startups through the Internet. Although crowdfunding has been passed into law, the SEC must still set the rules and regulations for these new "exchanges". Investors in crowfunding must be accredited. For an individual, this means more than $1 million in net worth or more than $200,000 in income for two of the past three years. A recent article for small business owners explains some of the rules, drawbacks, and taxes for crowdfunding.

M&A Down, Insurance Coverage Up

In the first half of 2012, mergers totaled $929.4 billion, down about 22 percent from the same period in 2011. At the same time, M&A insurance has increased. Policy limits for M&A insurance rose to $2.3 billion, a 35 percent increase. M&A insurance typically pays off if a seller misrepresents the position of the company. Such misrepresentations can include financial statement errors, errors about the customers of the company, or lying about the status of lawsuits or potential lawsuits. The buyer then may be able to file a M&A insurance claim for up to two years after the transaction.

The Board Versus The CEO

At one time, a company's Board of Directors was viewed as a rubber stamp for the CEO. Recently, Boards have become more active in the management and control of the company. Citi CEO Vikram Pandit resigned last week after a clash with Citi's Board and in 2011 Yahoo's Board fired CEO Carol Bartz. Other companies that have lost CEOs or Board Chairman leaving because of discord include American International Group and Hewlett-Packard. A recent survey indicates that 21 percent of Board Chairman in 2011 were independent, up from only 10 percent in 2006. Other factors cited which may be leading to the increased activism of Boards includes the recent financial crisis, increased regulation, and fear of investor lawsuits.

Cash Balances

When things get risky and uncertain, cash is king. Many companies seem to be following this advice. In fact, the cash balance for the S&P 500 companies is approaching $1.5 trillion. CNBC recently compiled a list of 10 cash rich companies. For example, Priceline has $2.4 billion in cash, which is 63 percent of the company's assets, compared to an industry average of about 20 percent. And Altera Corp. has $3.44 billion in cash, which is 80 percent of assets, compared to an industry average of 27 percent.