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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Elroy who wrote (220743)	2/24/2007 10:48:55 AM
From: bentway	Read Replies (1) \| Respond to of 281500

I don't know that. LINKs?

To: Elroy who wrote (220743)	2/24/2007 10:57:08 AM
From: Bill	Respond to of 281500

You are correct, of course. Most telcos have 10x debt to cash.

To: Elroy who wrote (220743)	2/24/2007 11:54:56 AM
From: Katelew	Read Replies (1) \| Respond to of 281500

You can't really use a corporate model for the US govt. It's perfectly acceptable for a telecom such as VZ to keep rolling over its debt as it builds out its business as long as it can maintain positive cash flow. It reinvests its cash flow back into the business, thus accumulating real assets as well as increased sales and profits. Always, of course, servicing its debt. When it's thru building out its business, it can then do a number of things....increase dividends, pay off debt, make acquisitions, or usually some combination of the above. If the business model is struggling and debt becomes a problem, the co. can sell assets to pay down debt. If you think about it, this is not the structure of the govt. There are no assets to sell, for ex., in order to pay down debt. And, as I said before, the govt. doesn't maintian positive cash flow. It's the opposite....the govt. creates additional cash flow by borrowing......something a corporation could not do indefinitely and survive.