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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: tekgk who wrote (6861)	11/2/1997 8:58:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 18056

tekgk. I am not sure I understand. Most utilities in this country pay hefty dividends and borrow quite heavily to "round up" their capital stucture. Are you saying that companies should avoid paying dividends until they have paid all their debts? I view it slightly differently. I look at my business and see that I can get 15% return on employed assets, I'll borrow part of the working capital required to run the business at let's say 10% (1.5 above prime, and within some prudent selection of debt to equity ratios), and if I did not, I would do a diservice to my stockholders, since my other alternative would be to dilute them with issuing additional equity (well if I can do that at many times book value, it not such a diservice after all). Debt is not all that bad, IMHO. Zeev