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|User Info||The Simple Facts On Equities And Debt; entered at 2022-09-16 08:10:51|
Corporations basically never pay off debt; they always roll it over.Let me see if I can get this right. Corporations do not pay off debt because they want to use financial leverage to increase earnings. So, debt is not retired.
In a falling-interest-rate environment that means say XXX amount of debt is appropriate. But, in a rising-interest-rate environment that means say X amount of debt is appropriate. So, the company needs to retire XX to get to where it needs to be when the environments switch.
If the company is retiring XX, then it is not spending on something else. That something else is probably taken from a long list of cost-cutting measures such as capital expenditures, maintenance (lol), salary freezes (ouch),...
Honestly, I would not be surprised at a 50% drop from here to the bottom.