Since even the mainstream media has figured out the world in general is suffering from a gnarly credit crunch, now is a great time to discuss the debt to equity ratio. The primary use of the debt to equity ratio is to determine the solvency of a company.
Debt is not necessarily bad […]

While poking around the internet researching the Foolish Flow Ratio, I came across another useful measure from The Motley Fool - the Cash King Margin. The Cash King Margin is basically a measure of net profitability. However, since it uses free cash flow* instead of earnings, which are bullshit, I find it a […]

The Foolish Flow Ratio is one of the most useful performance measures dreamed up by The Motley Fool. The Foolish Flow Ratio quantifies how well a company is managing their working capital. This measure appeals to my contrarian nature, because it treats inventories* and accounts receivable, traditionally considered assets, as liabilities. Conversely, accounts […]

With the term “liquidity crisis” currently flying around like shit in a pigpen, now is a good time to discuss the quick ratio, which is a strong test of liquidity. As such, the quick ratio provides insight to the short term financial health of a company. I like the quick ratio because it […]

I like to call enterprise value to free cash flow the thinking man’s price to earnings (PE) ratio*. Because the PE ratio relies on market capitalization, companies with higher debt loads can look cheaper or more attractive than competitors with less debt. Using enterprise value to free cash flow eliminates this potential distortion. […]

Enterprise value is how much a company would cost to buy outright. Enterprise value is important for comparing companies against each other, because it accounts for debt and equity. While market capitalization is often referred to as how much a company is worth, this is a shortcut and ignores debt and cash on […]

Prior to requiring an irritating registration, the Motley Fool provided plenty of useful articles discussing tools for analyzing companies. One of these tools is free cash flow. While net income and earnings can be fudged easily, free cash flow is important because it is more difficult to manipulate. Free cash flow […]

Another railroad performance measure I follow is average train speed. This measure, speed, is a pain in my fucking ass. Because financial disclosure regulations do not require it, railroads report speed whenever the fuck they feel like it or, in the case of Canadian National (CNI), almost never. However, reporting has […]

Yield, or revenue per car is another railroad performance measure I calculate. Because the capital and operating costs of rail are similar no matter if they are filled with raw sewage or gold, railroads with a higher yield are in a better position to put mad cash in their shareholders’ pockets. Keep in […]

I like railroads as an investment for the following reasons:

Simple to understand - railroads move heavy shit from point to point;
Macro-economic effects on railroads are easy to figure out - when the economy is good, people are shipping stuff, when it crashes, volume goes down;
Efficiency, railroads use substantially less fuel to transport […]