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> financial companies wouldn't have been able to roll over their short term debt, which they rely on for day-to-day operations The fact that they rely on debt
by richcollins 18y ago
> financial companies wouldn't have been able to roll over their short term debt, which they rely on for day-to-day operations
The fact that they rely on debt for day-to-day operations should be a red flag that they are doing something wrong.
- catch23 18y agoI think it's mostly as a way to smooth out their financial numbers, even companies with tons of money in the bank still uses short term debt on daily basis... at least that was how a business owner explained it to me.
- richcollins 18y ago> smooth out their financial numbers So how will they fail if they don't have access to it?
- newt0311 18y agoExcess inefficiencies if they have to adjust immediately. They would have to unroll all the debt in a few days instead of the months it would take to unroll the debt in an orderly fashion.
- ckinnan 18y agoIt is interesting, for cultural and for business reasons, most tech companies do not use debt markets. (Tech companies-- especially software companies-- generate lots of cash flow and aren't as capital intensive as other industries). There are also federal tax breaks that encourage the use of debt financing.
- eru 18y agoYour country's tax system is not alone in that regard.
- jaaron 18y agoThat's not the way the commercial paper market works. Many companies use this for payroll and managing cash. It makes sense to use someone else's money when the interest rate is low enough that you can put your own cash into better use. I wouldn't be too critical about this practice unless you have experience as a treasurer or CFO.
- richcollins 18y agoI'm not saying it doesn't make sense given the environment that they work in. I'm saying that the environment that they work in doesn't make sense.