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Data Update 5 for 2023: The Earnings Test

Musings on Markets

Accounting Returns While profit margins tell a part of the profitability story, a high margin, by itself, may be insufficient to make a judgment on whether a business is a good one, i.e,, a business that consistently generates returns that exceed the cost of funding it.

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Transcript: Stephen Suttmeier

Barry Ritholtz

Accounting was very difficult. It’s about a 50% fail rate, something like that. So it’s gonna take a little more confidence, you know, and equities to, because you get your, your hurdle rates higher, you know? And I remember that first level was tough. I had no finance background. Maybe even more.