Does it mean "They don't have enough money"?

"Reasons include a shortage of Chinese companies whose financials pencil out. Many that have gone public are “unicorns” worth more than $1 billion -- valuations that may be out of reach, said Yanhong Lin, founder and managing partner of CTIC, which is based in Palo Alto, California, and has offices in Shanghai and Nanjing."

Source: https://www.bloomberg.com/news/articles/2017-01-10/china-investors-have-money-want-biotech-and-don-t-fear-trump

2 Answers 2


pencil out is a phrasal verb, and when used in a business context, it means to estimate in approximate figures whether a proposed investment is expected to be profitable. In other words, does it make economic sense or not.

A convoluted example (but it gets the point across):

Net Operating Income (NOI) for a proposed investment was estimated at $10,000 and compared with an offering price of $200,000. The resulting expected cash-on-cash return of 5% did not pencil out because the buyer’s objective was a minimum return of 8%.

In the example you have given, the reason that Chinese investors are continuing to invest in U.S. biotech companies is that there is a shortage of Chinese companies where it makes economic sense to do so.


That's a new one on me, but in this context "pencil out" means something like "demonstrate, in their estimated form" or "suggest provisionally". The phrase is based on the idea that something written in pencil (as opposed to in pen) is not permanent and may be subject to change. So "pencilled out" (or just "pencilled") financials are the informal, rough numbers that are not necessarily 100% accurate yet.

A similar phrase is "pencil in" which can be used when setting appointments that have still to be confirmed. So if I was calling you to arrange a meeting and you were fairly sure you could manage next Tuesday but you wouldn't know until tomorrow when you planned to find out some other piece of relevant information then I could say:

Well why don't I pencil you in for next Tuesday and you can then confirm tomorrow if that will work?

  • 2
    My guess is the average native speaker won't have encountered this pencil out usage before, but presented with the example text they'd probably figure out the intended sense. Using exactly the logic you sketch out above (doing things in pencil is "tentative", pencil in is well-established, and we set out, sketch out, work out, rough out, draw out,... possible future plans). Jan 12, 2017 at 15:48

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