Guide to Analysing Companies

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Bonus issue
See scrip issue.
Book
The accounting record of a business or of an issue of securi-
ties. Book-keeping is the maintaining of the ledgers and other
books of record of a business. With every issue of securities or
syndication to lenders of a loan, at least one bank (or firm of
brokers) is appointed for a fee to manage, or run, the book.
These days, not only is such an exercise carried out with the aid
of computers, but, assuming there is sufficient demand, it can
also be undertaken 24 hours a day around the world.
Book runner
An investment bank or securities firm that is responsible
for the documentation and general management of an issue of
securities to investors or the syndication to lenders of a loan.
Book value
The value of a company’s assets as expressed in its balance
sheet, which itself is only a snapshot of assets and liabilities
at a particular time. This can be less than the assets’ market
value since accounting conventions may dictate that the assets
be included in the accounts at their purchase price. inflation
alone may have ensured that this is less than the assets’ current
market value.
Bought ledger
The division of a company’s accounts department that deals
with its payments to creditors. In order to smooth a company’s
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cash flow, this division usually attempts to buy time before
making payments to suppliers and the like.
Brady Bond
Dollar-denominated bonds issued by the governments of
emerging economies, particularly those in Latin America. Named
after Nicholas Brady, who was Treasury secretary in the United
States during the 1980s, the bonds were developed as a way of
bailing out countries that had defaulted on their external debt.
By issuing new debt supported by Treasury bonds carrying no
interest, Brady bonds effectively guarantee the repayment
of the principal on the loan, if not the interest on them. The
idea worked well until, in 1999, Ecuador became the first country
to default on interest payments due on its Brady bonds. There-
after, even Brady bonds were regarded as vulnerable to default.
Branch
A retail outlet of a bank; the places around the country where
it collects deposits, makes loans and arranges money trans-
action services. Electronic banking (via atms and the internet) is
increasingly making branches (and the people who work in
them) redundant. Cutting the number of their branches – or, as
some banks have done, starting a business from scratch without
any – not only reduces costs but can also lead to greater satis-
faction for customers. Many customers find that, when they
need one, a friendly voice at the end of the telephone can be
just as helpful as a bank teller behind a glass screen. Others
complain that they can no longer talk to staff at their local
branch because calls are routed to anonymous call centres. Nev-
ertheless, surveys show that customers rate efficiency most
highly, however it is delivered.