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An economist I was listening to recently recommended assessing your employer's debt to equity ratio to determine its resiliency in a recession.

onlyrealcuzzo 4y ago
So Apple, Google, MSFT, and AMZN?
asdfman123 4y ago
Does that count for tech? I just looked at tech's and it's all between like 0.25 - 0.6 for the few samples I looked at. Netflix is 0.8 but still I think is low for most companies? If you Google "good debt to equity ratio" one site says 2.0 - 2.5. I'm not sure if this applies here.
- nowherebeen 4y ago
  There are other things to look at such as how resilient their business model is, their price/ earning ratio, etc. But in general, I would say those tech companies that have huge price swings during the pandemic are most likely to going have some sort of layoff. They are the ones that most likely over-hired.
- JumpCrisscross 4y ago
  > Does that count for tech? Financial debt kills because free cash flow gets squeezed. For most tech companies, operating expenses constrain free cash flow. Quick ratio [1] and free cash flow (or alternatively, operating cash flow) as a fraction of cash on hand (or less conservatively, current assets) would be my go-to acid tests. [1] https://www.investopedia.com/terms/q/quickratio.asp https://www.investopedia.com/terms/q/quickratio.asp
  - asdfman123 4y ago
    Can you explain that like you'd explain it to your elderly mother
    - JumpCrisscross 4y ago
      > Can you explain that like you'd explain it to your elderly mother Don't work for a tech company if you rely on wages for subsistence.
      - asdfman123 4y ago
        A little bit more detailed than that? I used to work for the oil industry felt (and probably objectively is) far less stable.
  - patrck 4y ago
    Yeah, think like equity analysts during upturns, and in a downturn think like credit, ie. map out the sources and uses of funds. The big caveat here is rising rates on floating rate debt, and the marginal response of revenue to higher rates.
paxys 4y ago
That doesn't really mean anything. Lots of large companies with hundreds of billions in their bank account lay people off by choice rather than compulsion when the environment ensures that they won't get too much negative press for it. Same thing happened in 2008 with Microsoft, Google and many others.
- dntrkv 4y ago
  Which Google layoffs are you referring to?
gaws 4y ago
> An economist I was listening to recently recommended assessing your employer's debt to equity ratio Do employers even offer that kind of detailed information to employees?
- eftychis 4y ago
  They should -- if they are not willing to answer on the runway you probably should not join/prepare to head out.
- ketzo 4y ago
  For a publicly traded company, that information would be publicly available, if that's what you're asking. And at a startup, particularly an early-stage one, I would feel pretty uncomfortable if they wouldn't tell me that information in an interview.

onlyrealcuzzo 4y ago

So Apple, Google, MSFT, and AMZN?

asdfman123 4y ago

Does that count for tech? I just looked at tech's and it's all between like 0.25 - 0.6 for the few samples I looked at. Netflix is 0.8 but still I think is low for most companies? If you Google "good debt to equity ratio" one site says 2.0 - 2.5. I'm not sure if this applies here.

nowherebeen 4y ago
There are other things to look at such as how resilient their business model is, their price/ earning ratio, etc. But in general, I would say those tech companies that have huge price swings during the pandemic are most likely to going have some sort of layoff. They are the ones that most likely over-hired.
JumpCrisscross 4y ago
> Does that count for tech? Financial debt kills because free cash flow gets squeezed. For most tech companies, operating expenses constrain free cash flow. Quick ratio [1] and free cash flow (or alternatively, operating cash flow) as a fraction of cash on hand (or less conservatively, current assets) would be my go-to acid tests. [1] https://www.investopedia.com/terms/q/quickratio.asp https://www.investopedia.com/terms/q/quickratio.asp
- asdfman123 4y ago
  Can you explain that like you'd explain it to your elderly mother
  - JumpCrisscross 4y ago
    > Can you explain that like you'd explain it to your elderly mother Don't work for a tech company if you rely on wages for subsistence.
    - asdfman123 4y ago
      A little bit more detailed than that? I used to work for the oil industry felt (and probably objectively is) far less stable.
- patrck 4y ago
  Yeah, think like equity analysts during upturns, and in a downturn think like credit, ie. map out the sources and uses of funds. The big caveat here is rising rates on floating rate debt, and the marginal response of revenue to higher rates.

paxys 4y ago

That doesn't really mean anything. Lots of large companies with hundreds of billions in their bank account lay people off by choice rather than compulsion when the environment ensures that they won't get too much negative press for it. Same thing happened in 2008 with Microsoft, Google and many others.

dntrkv 4y ago
Which Google layoffs are you referring to?

gaws 4y ago

> An economist I was listening to recently recommended assessing your employer's debt to equity ratio Do employers even offer that kind of detailed information to employees?

eftychis 4y ago
They should -- if they are not willing to answer on the runway you probably should not join/prepare to head out.
ketzo 4y ago
For a publicly traded company, that information would be publicly available, if that's what you're asking. And at a startup, particularly an early-stage one, I would feel pretty uncomfortable if they wouldn't tell me that information in an interview.