I would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame.

> would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame

Bankruptcy is a symptom of leverage. Companies more and more fail by being acquired into oblivion. (It's also common for a dying industry to consolidate until its last gasp.)

There are other exits besides bankruptcy, I think a lot of companies kind of whimper into near bankruptcy and then sell to others or just cease operation without bankruptcy, would need to get actual data, but that is my speculation.

Acquisitions mask a lot of it.

Its why almost no YC companies have “gone bankrupt,” someone one will usually pay a nominal amount “for a team” and founders are happy for the soft landing.

That's fantastic debt though, at presumably low interest rates. A dollar in my pocket today is worth way more than a dollar in debt at 3.0% interest or less. You can't subtract debt from cash on hand and get a usable value, they're different types.

Could you clarify what you mean about the dollar in your pocket worth more than debt at 3% interest?

In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.

Now since most of MSFT’s long term debt matures in 2027 or after, you could argue that there is not much cash need for debt repayments in the near term. On the other hand, cash flow from operations was down year over year in their last reported quarter so belt tightening is probably needed to reverse that trend.

> In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.

I'm not a financier, but isn't "available cash" the amount left over after subtracting the amount needed to service (rather than clear) the debt?

Fair question. My answer would be... kinda.

The cash available on an ongoing basis to be re-invested or returned to investors is what you might call levered free cash flow [0], which I think is what you are referring to.

My comment about "available" cash is more like available for big one-time investments like a big acquisition, a special dividend, or something like that.

[0]: https://www.investopedia.com/ask/answers/111714/whats-differ...

It's "MBA circle jerk" to understand that taking out debt at a lower rate than the ROI you use the debt for is advantageous?

I don't really agree with the person you replied to because 'enough to bankrupt a small country' is not a helpful comparison.

But while the debt obligations are certain, the ROI is less so.

Not really, it's financing 101. If the cost of borrowing money is low then it's worth taking on debt to finance your growth. Once the rates rise you can service that debt (likely at ~1.5%) and reap the rewards on extend yourself with those low interest rates.

You don't even need to be an MBA so see that value, even your dentist probably does it. If they can borrow 150k and increase the size of their clinic, they can then get more money from providing their services to more people.

If you comment was more aimed at the amount, $77B, then keep in mind that it's far from a bad ratio considering the assets of MSFT at 107B that's 0.7 which is high but not abnormally high considering that we are coming out of historically low rates.

Finally, there is such a thing as carrying too little debt, which is unsurprisingly a bad thing because it hinders your growth. Think about what MSFT did with that money. They hired people and developed new products to fight AWS and GCP if they hadn't done that, their rate of innovation would be lower and they would have fallen behind, slowing their future growth. Without cheap debt they likely wouldn't have given a ton of compute to OpenAI for ChatGPT which is now making MSFT look much better compared to Google and Amazon.

A fantastic thing in fact!

That's exactly what a balance sheet does. Offset assets and liabilities.

A lot of the bloat is at the top. How many executives, VPs, directors, high level managers, etc. are part of this?

Generally layoffs include management cuts as well.

There are far more employees than executives, though. Think about how many employees are in the org chart under a single VP.

Numerically you can’t get appreciable cost reductions by reducing management alone.

Bloat can be all over the place, it’s not exclusive to the top of org charts

Bloat at the top, whether people, process, or organizational bloat, has an amplification effect that isn’t found at the bottom.

It's a trap companies can easily find themselves in. If you're looking to cut costs, the first thing the C-Suite will look at is all the workers that aren't adding immediate business value, so you cut them first; simple and easy. Then as tech debt and issues pile up, you, as management, figure that your first approach to figuring out what's going wrong is to hire managers and consultants to understand why your workers aren't as productive as before. Unfortunately all of these middle managers just create more burden on workers as they are micromanaged and sent to meetings more by managers looking to justify their existence. Of course these managers will say whatever the C-Suite wants to hear to keep their jobs, so more blame is pushed onto the lowest level, more managers are hired to try to make them more productive, and a vicious cycle continues.

prbobaly not a whole from the layoffs i've seen at 2 of my employers.

classic IC answer

source: I'm an IC

Is there a position there?

Those are the people making the layoff decisions...

That debt is likely just leveraging OPM though.