4 ms·
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
by 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 agoThere 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 agoCan 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 agoA little bit more detailed than that? I used to work for the oil industry felt (and probably objectively is) far less stable.
- patrck 4y agoYeah, 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.