QianmengYu :
ZIM heavily uses financial lease / capital lease. (US style) long term lease a new car say 50,000 value, you pay 600/ month for 3 year. Expect to sell at 30000 then. (leaser makes 1600). In accounting however, it’s like you have 50000 asset, 50000 liability (though that doesn’t mean you are in debt. so don’t worry about leverage). 555/month cost, 44/month interest. liability reduces 555/month, but asset is allowed to depreciate in a different but reasonable speed. At end of 3 years. You redelivery the car and you are done. But market prices or the car changes and your asset booking is different anyway, your accounting book needs to adjust that difference as a profit or loss, it makes people a chance to defer gain or exaggerate profit (few people do). On the other hand, why ZIM pays dividends buy uses loans for liquidity in the time of high interest? Simple answer, stock owners has too high capital cost rate which makes expensive loan cheaper… loan is like 10% to but controlling shareholders want 20%. Plus Israel interest rate is 4.5% lower than US. ZIM can easily finance using owned ships.
QianmengYu : ZIM heavily uses financial lease / capital lease. (US style) long term lease a new car say 50,000 value, you pay 600/ month for 3 year. Expect to sell at 30000 then. (leaser makes 1600). In accounting however, it’s like you have 50000 asset, 50000 liability (though that doesn’t mean you are in debt. so don’t worry about leverage). 555/month cost, 44/month interest. liability reduces 555/month, but asset is allowed to depreciate in a different but reasonable speed.
At end of 3 years. You redelivery the car and you are done. But market prices or the car changes and your asset booking is different anyway, your accounting book needs to adjust that difference as a profit or loss, it makes people a chance to defer gain or exaggerate profit (few people do).
On the other hand, why ZIM pays dividends buy uses loans for liquidity in the time of high interest? Simple answer, stock owners has too high capital cost rate which makes expensive loan cheaper… loan is like 10% to but controlling shareholders want 20%. Plus Israel interest rate is 4.5% lower than US. ZIM can easily finance using owned ships.