Comments

You must log in or register to comment.

VisualMod t1_j1fc05w wrote

>There are a few reasons why companies might choose to carry more debt than cash on their balance sheets. One reason could be that they believe they can invest the borrowed money at a higher rate of return than the interest rate they would pay on the debt. Another reason could be that carrying more debt gives them certain tax advantages. And finally, some companies may simply feel like they have enough cash on hand and don't need to keep any extra as buffer.

5

345612345 t1_j1fd4cn wrote

Very nice, Clippy! Then there are the tax evas...i mean planning schemes that include borrowing money subsidiaries don't really need, so they pay back loans instead of having taxable profit. And where they borrow the money from happens to be in a country with favorable taxation.

1

VisualMod t1_j1fbzkr wrote

User Report
Total Submissions 1 First Seen In WSB 1 year ago
Total Comments 16 Previous Best DD
Account Age 1 year [^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.) [^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)

^^Discord ^^BanBets ^^VoteBot ^^FAQ ^^Leaderboard ^^- ^^Keep_VM_Alive

1

Jmb3d3 t1_j1fckb2 wrote

If they borrow the money and make more than the principal plus interest, then their Return on Investment is greater than 100%. They didn't invest any of their own money and instead used other people's money.

1

Eastern_Area_3173 t1_j1fcxh4 wrote

Debt was cheap until recently. Why not use it for investment.

1

Wallstreetdodge69 t1_j1fdz79 wrote

T lost alot of debt due selling assets /spin off. IT was much higherimg

1

wsbautist420 t1_j1fevh7 wrote

I agree with you, but you are looking at it with the perspective of a mom and pop business.

Corporations want to leverage ballz deep, maximize their sales and revenue in all markets, then layoff and close unprofitable locations, at a later date/during a recession.

Some companies don’t care if they turn a huge profit, they just want to keep the competition out of business.

If you aren’t using debt as a tool, the other corporations will use it, then do everything they can to outcompete you.

If shit hits the fan, the government will bail you out by buying up corporate bonds and other debts.

Shit is crazy.

1