AMERICA’s companies acquire been powering ahead for years. Amid growing profits,the recession that began in 2007 seems an increasingly distant memory. Yet the situation has a dark side: companies acquire binged on debt. For now, as the satisfactory times acquire coincided with a period of record-low interest rates, and markets acquire been untroubled. But a shock could place corporate America into pains.
No matter how it is measured,the debt load looks worrying. When calculated as a percentage of GDP, the total debt of America’s non-financial corporations reached 73.3% in the second quarter of 2017 (the latest available data). This is a record high. Measured against earnings before interest, and tax,depreciation and amortisation (EBITDA), the net debt of non-financial companies in the S&P500 hit a ratio of 1.5 at of the halt of 2016, and a level not seen since 2003. And it remained nearly as high in 2017 (see chart).
To be sure,things are less worrying than they were before the financial crisis. According to a recent analysis by S&P Global Ratings, a...
Continue reading
Source: economist.com