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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (49071)8/12/2012 2:53:19 PM
From: Jurgis Bekepuris1 Recommendation  Read Replies (1) of 78651
 
3 x the amount of debt (why having debt at all with so much cash?)
Funny, you don't ask this question about MSFT, GOOG, etc. :)

Companies with tons of cash have debt because:
- Debt is cheap now
- You cannot get debt on moment's notice - it's better to get it beforehand
- Debt might be covering levered assets (think mortgage)
- For multinationals, debt is usually in one country while cash is in another and neither are easy to move. (Chinese companies get debt in USA to pay US divvies, since exporting yuan cash is not so easy...).

For Chinese stocks there was an argument some time ago that they look more credible if they have debt, since banks may do better DD than investors. Now you are complaining about the opposite. So damned if you do, damned if you don't? :)

I'm not saying XIN is not a fraud. It may be. However, there are tons of legit reasons to have tons of cash and some debt. :)
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