Is The $136 Billion Debt Of General Electric A Deterrent?

10/27/17

When running scans on free cash flow yield, I noticed General Electric Company (NYSE: GE) back in Q2 of 2016 to have a confusing outlook. Why would a company with negative free cash flow/FCF be so loved, pumped and even continue to offer the dividend while cash reserves depleted? Recently, Jim Cramer came out and said the cash flow was an issue. I couldn't agree more and wrote the brief, "GE's Q3 2017 Swift FCF Yield."

Possibly more alarming than the cash flow is the debt. They are holding roughly $136B in long-term debt. Wow! At the new share lows around $21; $136B long-term debt is nearly 75% of GE's market capital. Before we talk about the popular speculation of a dividend cut/suspension, let's compare the debt with companies notoriously scoffed for lack of profitability.

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