10 Comments
Aug 26, 2023Liked by Adam Mead

I'm curious if there are any helpful examples from Buffett on how to think about operating leases. I know he talks about capitalizing these leases (as now required on the BS) but does it also make sense to adjust the OE or EBIT, etc. for the current lease expense.

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One of your best one’s yet

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author

It is, and I should have gone further in explaining. By separating them you can get behind the drivers of ROC. Hope that helps!

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Wouldn't the simple formula be simpler if it was just operating income/invested capital rather than sales/invested_capital *operating margin/invested_capital? Aren't they just the same

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See's candies as well, a purchase price of $25 million, on revenues of $30 million, and $8 million in capital earning pre-tax profits of $5 million in 1972.

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Aug 23, 2023Liked by Adam Mead

Maybe an error in the buffet simple calculation? I could definitely be wrong thanks for the article!

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