Poll of the Day > Do large companies have a plan to not be in debt?

(+) Yeah! (+)

It seems like many big companies carry heavy debt. I guess the every day person carries debt too...

So is bankruptcy just when a company cant make their minimum payments? Cant they go into more debt to make them? Is anyone actually responsible? I guess upper management if theres fraud.

they should just pull themselves up from the bootstraps

---

All big companies are in debt. The amount of money they make from borrowed money is more than the interest.

---

Managed debt is just part of capitalism, that goes for both individuals and organizations.

---

debt isn't inherently a bad thing, and when utilized effectively is a very good thing

---

It's not that they're so much "in debt" as they keep reinvesting in the business to avoid paying taxes on profits. When people make a big deal about companies like Amazon not turning a profit for years, it was mostly because they were reinvesting earnings back in the company to fuel growth. If you're trying to grow a company, you need to invest in that company which is a mix of putting earnings back into the company and taking on debt.

And considering that most businesses use lines of credit, you're always going to carry a certain amount of debt for practicality reasons. Most vendors are also creditors.

That said, you can grow a large company without taking on a substantial amount of debt (although lines of credit on material and merchandise will be still a thing), it just takes far longer and the company might never get as big as it could have been.

blu posted...

So is bankruptcy just when a company cant make their minimum payments? Cant they go into more debt to make them? Is anyone actually responsible? I guess upper management if theres fraud.

It's a company. They'll get extensions. The people lending them money don't want them to file bankruptcy because then they risk losing that money under a Chapter 11 (or getting a small part back in a Chapter 13). And yes, they may take on new investors or loans to cover old debts.

If a company is declaring bankruptcy, usually things have been going badly for a very, very long time. It's less a matter that they're going to miss payment and more a matter that they missed a lot of payments in a row and have no hope of repaying people or coming up with new funds.

blu posted... Is anyone actually responsible? I guess upper management if theres fraud.

Depends on your definition of "responsible"? And they could be financially on the hook if they set up the company badly, particularly if they mixed their finances.

---

i believe they usually buy a smaller, or failing company and then they dump their current debt onto it, ok?

---

They have as a much a plan as Dutch did.

---