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Report: Ten major companies moving toward bankruptcy

By Andrew Moran     Sep 23, 2009 in Business
Mainstream financial institutions believe the U.S. recession is coming to an end but many companies are still struggling to avoid bankruptcy.
For several months, the Federal Reserve has been telling the American people that the recession is coming to an end, financial networks like CNBC continually discuss a possible jobless recovery and the government is proclaiming their stimulus packages and intervention helped avoid another Great Depression.
Nevertheless, according to The Business Insider, a large number of household companies, such as Sprint, Macy’s and Hertz, are trying to stave off bankruptcy.
The Business Insider compiled the list of top ten companies facing bankruptcy, in accordance with a Reuters article. but also removed any companies with a market cap of under $3 billion. They then measured bankruptcy risk “Market Cap (MC) divided by Enterprise Value (EV). The less MC vs. EV.”
The companies are as followed:
1. Hertz
2. Textron
3. Sprint Nextel
4. Macy’s
5. Mylan
6. Goodyear
7. CBS
8. Advanced Micro Devices
9. Las Vegas Sands
10. Interpublic Group
The common theme among all of these companies, according to The Business Insider, is debt. A company like Hertz is in business due to debt, “When you have tons of debt financing your fleet of cars, falling rental demand really hurts.”
Many of the corporations listed are in billions of dollars in debt. Macy’s, for example, has long-term debt of $2.4 billion and Mylan has $5 billion of long-term debt.
With these fledgling companies one must wonder if this will take a toll on the increasing number of the unemployment rate.
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