Here is a little secret about me, that is really no secret at all. I do not understand the bulkiest part of accounting. Not me. In past years, when I have volunteered to serve on various Boards of Trustees, I warn them in advance. “Do not put me on the Finance Committee, or in the Treasurer’s seat.” I have no aptitude for it and I really do not want to know.
That being said, I understand the basic principles. I can certainly balance my checkbook. I know that if I have $5 and something costs $8, I do not have enough money. And by those measures, I cannot afford it. It is out of the question.
However — there is always a “but” — and this is the tricky part. I really, really WANT that item. And, If I want that $8 item — let’s say it is a vintage Dino Flintstone PEZ dispenser in mint condition with the candy included — I would have to beg, borrow, or steal $3. And depending on my source of money, most likely, I would have to pay it back.
We could go on with this all day. But the bottom line is this. Now I’m $3 in the hole and I have to figure a way to get it back. I know better than to keep doing this, because then I will really, really be in the hole. Or, as the big players say — “in the red.” I better find a way to repay that money, before I go borrowing more. This is a rudimentary principle.
So it always floors me, when I open the newspaper and read the headlines. ( Sidebar: I’m talking as if the paper comes rolled up on my doorstep. No, I unfurl the likes of CBS, CNN, and USA Today, on my computer screen, first thing in the morning, moments after I check my email. You get the picture.). Anyway, the headlines.
This morning, the headline said: “Kraft Heinz is sitting on debt worth almost $31 billion”
That’s a lot of Ketchup.
I won’t reprint the entire article here, but some lines really stand out and need to be revisited.
The Kraft Heinz food empire has a debt problem. — No shit.
Heinz took on debt when the ketchup giant was taken private in 2013 by 3G Capital for $28 billion. — You bought one big ass PEZ dispenser and you didn’t have the money. Now, you have to sell ketchup, and a LOT of it, to pay the money back.
The Warren Buffett-backed food giant’s serious missteps have brought its bloated balance sheet into sharp focus. — Holy Smokes. Missteps are when you are walking on the sidewalk and you stumble a bit. Losing $31 billion is more like plunging from an airplane without a parachute.
Kraft Heinz, the owner of Oscar Mayer, Velveeta and Planters nuts, is now scrambling to raise cash that can be used to pay down its nearly $31 billion of long-term debt. — Like I said, you better sell some ketchup.
The food giant slashed its dividend by 36% and announced plans to sell off brands, reportedly including the Maxwell House coffee business. — Don’t blame it on the good coffee. Blame it on your Chief Financial Officer, aka, your CFO. He is the guy with the big office in the corner with all the windows. With the nice suits and the Lamborghini.
“Its balance sheet has ballooned,” JPMorgan Chase analyst Ken Goldman wrote in a report late last week. “This is not an ideal progression of financial metrics,” Goldman wrote. — What? You need this Goldman guy to tell you that your situation is not ideal? You are out $31 billion bucks. I get all out of joint when I have to borrow 30 bucks from somebody. I’ve sold first born children in those cases.
There you have my story. I am no account and make no claim to be.
But I know when I can’t afford a PEZ dispenser. And I know that it takes a lot of bottles of ketchup to add up to $31 billion. You can bet your ripe red tomato on it.
“A Penny Saved is a Penny Earned”
― Benjamin Franklin
“While money can’t buy happiness, it certainly lets you choose your own form of misery.”
― Groucho Marx
“Don’t think money does everything, or you are going to end up doing everything for money.”