Businesses that might find themselves going out of business
Jennifer McClelland | RSS | 4 Comments
The Business Insider had an article from September 18th that said what companies, using a Market Cap to Enterprise Value ratio, might be going bankrupt in the future. A lower MC/EV score means that is a company that is far more likely to go bankrupt.
I found some of the companies on the list to be a bit surprising.
Here is the list from the Business Insider:
The number one company that is likely to go bankrupt with a EV/MC ratio of 32% is Hertz. The company had to take out a huge amount of debt to fund its fleet in May. In June, the rating of the company was dropped by Moody’s.
Number two on the list is Textron. The company sells business jets, which is not the business to be in right now. The company had to write off $2.3 billion and cancel a new jet design. The MC/EV ratio is 39%.
Number three is Sprint/Nextel. I am not that surprised to see Sprint make the list, but I really have high hopes for the company because I suppose I have a lot of loyalty toward the company. In reality, Sprint’s poor decision to buy Nextel and the fact that it is hemorrhaging customers (well, hopefully this will slow down due to the new phone offerings and actual great deals on service) has led to the company having a MC/EV ratio of 41%.
Number four, and perhaps the most surprising to me on the list, is Macy’s. The original article asks if anyone shops at department stores anymore and I can honestly say, from what I’ve seen…yes they do and they do in en masse. Same store sales fell all year (but, really, what retailer has done that well this year?). The company has $2.4 billion worth of debt set to mature over the next five years. The MC to EV ratio is 47% for Macy’s.
Fifth is Mylan. Mylan bough Merck’s generic sales an business department in 2007 and overpaid for it. Because of the bad deal it got, it is facing $5 billion in long term debt. Mc/EV ratio for the company is 51%.
If you would like to read the rest of the list, please visit the source.
What companies could we see go bankrupt in the future?
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Tags: business jets, new jet, business department
praet | Sat, Nov 14 2009
It’s a really surprising list… I really doubt that government will allow somebody like macy’s to fall as there’s too many jobs at risk and as it looks as we’re on the right track now and stock markets around the world assume we turned the corner it would be very unusual for somebody as big to go bust.
Steven from Locksmith Servcies | Wed, Dec 02 2009
wow………seriously finding Macy in the list is shocking…..looking at the amount of customer it has………. but i think that though on the list …..macy surely has some back up plans with the government to ensure the growth and sustainability of the company and its employees..
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Gary | Wed, Dec 16 2009
Why is it a shock that Macy’s is on the list? They have been struggling for years. What’s a shock to me is that they are still in business today. If I remember correctly, Macy’s is part of Federated department stores and Federated has already been through bankruptcy once. Correct me if I’m wrong but they have struggled to turn a profit since then.