Thirteen companies in the S&P 500, including Boeing (BA), Ford (F) and National Oilwell Varco (NOV) carry eight times or much more in total debt versus their annual adjusted cashflow, according to an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. Cashflow in this case is earnings before interest, taxes, depreciation and amortization (EBITDA) the past twelve months.
That's more than double the 3.2 times of debt to cashflow, on average, in the S&P 500, excluding financial firms. Debt to cashflow of five or more is considered to be high. That means it would take five years to repay debt. It might also be difficult to borrow more.
Such debt buildup has worried investors for months. The coronavirus bear market puts the fear on top of mind. And it's yet another reason savvy traders know to get out of the market and stay out for now.
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