stress-free investing, page-9

Thanks Camden, not a 'suck eggs' explanation at all, appreciate the detailed response.

ok, i think I understand now. I was struggling with the concept when applied in perpetuity, and the fact that no cost if fixed when a long enough time period is considered. I was assuming that fixed costs would trend towards long term averages as the business grew.

Do you apply this theory to long-term growth forecast or for a few years at a time and then recast your forecasts?

Cheers
Gralynchett

P.S Yes, either this situation, or more commonly these days the excess cash is deployed to some other project/investment/business, thanks to remuneration KPI's of rewarding good ROE numbers and increasing market capitalisation. Anyway, I'm no remuneration expert and i digress.

P.P.S Yes, you are right. I just took figures at face value with no adjustments. I also only looked back 4 or 5 years, so possibly wasn't getting the full picture.