Comment, question or quotation of the day

01-04-2020 : If turnover falls by 10% as a result of the coronavirus crisis, how much will profits fall?


This is a question that is easy to answer ... to a certain extent.


In each edition of Vernimmen we give a breakdown of the fixed and variable costs estimated by Exane for the main European listed companies. With an operating leverage of 2.7 estimated for 2019, a 10% drop in sales translates, on average, into a 27% drop in operating income and probably a little more for net income due to the fixed nature of financial expenses. 


That said, like the slope of a tangent to a hyperbola, operating leverage becomes distorted and increases the closer one gets to breakeven. For example, with the 10% drop in sales, operating leverage is no longer 2.7, but 3.2. A further 10% drop in sales would this time lead to a 32% drop in operating income. This is in line with the first break-even law, which states that the closer you are to break-even, the greater the sensitivity of earnings to a change in business.


However, many companies have higher operating leverage than listed companies because their margins are lower than those of the tenors of the stock market, which averaged an operating margin of 15.1%.


Good day and see you tomorrow 

31-03-2020 : Quote of the day

“We should let the markets take care of all that is important, and leave what is essential to the State.”

André Comte-Sponville


The glossary provides definitions for a couple of thousands of financial, stock market or economic terms.
This financial dictionary allows beginners to progress in their learning of finance and to experts to cease the precise meaning of a sentence.


The Quiz offers over 300 questions with answers to progress in your understanding of finance and to test your knowledge.
Questions are sorted by key topics (financial analysis, investment and stock markets, value, financial engineering and financial management).


We frequently ask our readers to give us their point of view on a specific topic.
You will find here the current survey with the to-date status of answers as well as past polls.

Financial data

Thanks to our partner Infinancial, we can offer on this page financial data on over 16 000 groups around the world.
Updated several times a year, this database offers information sometimes hard to find elsewhere (beta, …)

The Letter

Number 128 of March 2020

News : Liquidity and solvency in this new world

Statistics : Easier said than done: the vote of institutional investors in favour of environmental issues during AGMs

Research : Dramatic drop in the number of listed companies

Q&A : If the dividend doesn't remunerate shareholders, what does?

COMMENTS : Comments posted on Facebook