Guide to Analysing Companies

Intangible assets
The assets of a company (such as a brand, franchise, trade-
mark or other form of intellectual property) that cannot be
touched, yet have value. In most jurisdictions, attributing a
value to such assets increases a company’s net worth (by adding
to the plus side of the balance sheet) but does not always
add to its earnings. This is because, once valued, intangible
assets usually have to be depreciated each year; this is a cost.
For this reason, companies that have built up brands from
scratch often decide not to value them, particularly if they are
increasing in value. However, companies that acquire brands or
other forms of intellectual property separately, or when they
acquire another company, invariably have to depreciate them
over time. (See also depreciation and goodwill.)
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Interbank market
A financial market in which banks deal with each other; a
central part of any efficient financial system. Interbank markets
work at two main levels: at the top are central banks, which
use the interbank market to influence interest rates and thus
determine the direction of monetary policy; below that are
banks and financial institutions, which exchange funds
between themselves and enable the financial system to work ef-
ficiently. Banks that get more deposits from their customers than
requests for loans need a market in which to sell their surplus
deposits to those in the opposite position.
The interbank markets are most tested during times of finan-
cial crisis when interest rates rise, pushing up the cost of money
for those who need it most. One of the biggest tests in recent
years was during 1998 when Russia reneged on its sovereign
debts and Long Term Capital Management, a hedge fund,
came close to collapse and had to be rescued by a group of
banks at the behest of the US federal reserve. Both incidents
involved liabilities running into billions of dollars. A subse-
quent study by the bank for international settlements
found that, despite the strain placed on the interbank market, in-
terest rates fluctuated only marginally from the base line set by
central banks. This suggests that money was able to reach the