Robert A. Bonavito, CPA PC


Hamada’s Equation

Hamada’s equation is very important in finance and was invented by and named after Robert Hamada. The formula is used to separate financial risks from business risk. This formula takes out the effect of financing from a company’s beta. This formula is extremely useful because once a beta is un-levered we can then use it to compare to other companies with different capital structures.

Posted January 2, 2019 by Robert aABonavito in Business Valuations

Fixed Income Market and the 2 in 10 Year Bonds

When you talk about bonds changes in the bond pricing use basis points. 100 points equals 1%. For example, if I say a bond went down 50 basis points, basically I am saying it went down ½ %. One of the best indicators of the health of the economy is the spread between the 2 in 10-year bond.  I tracked this on a daily basis and usually the spread is 200 basis points. Typically, the 2 year is at 2% and the 10 year is at 4%. However, in recent years the spread has hovered around 100 basis points, and currently in 2017 was at a low of 75 basis points. I am very concerned about the spread between the 2 in 10 year, but maybe due to the structural changes in the economy this tightening of the spread will not lead to catastrophe as it has in the past.

Posted November 30, 2018 by Robert A Bonavito in Educational Videos

Father of Forensic Accounting

Many people do not realize that accounting actually started in 3500 BC, and it steadily developed until approximately 450 A.D. In 450 A.D. an Italian monk named Luca Picioli wrote a book called Summa the Arithmetic, Geometry of, Portion. This book codified for the first time in history the basic principles of accounting. The book discussed the methodology of recorded debits and credits, preparing income and balance sheets. That is why Luca Picioli is largely known as the father of accounting.

Posted November 30, 2018 by Robert A Bonavito in Educational Videos