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Comment by asdfman123 | Hacker News Reader

Does that count for tech? I just looked at tech's and it's all between like 0.25 - 0.6 for the few samples I looked at. Netflix is 0.8 but still I think is low for most companies?

If you Google "good debt to equity ratio" one site says 2.0 - 2.5.

I'm not sure if this applies here.

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> Does that count for tech?

Financial debt kills because free cash flow gets squeezed. For most tech companies, operating expenses constrain free cash flow.

Quick ratio [1] and free cash flow (or alternatively, operating cash flow) as a fraction of cash on hand (or less conservatively, current assets) would be my go-to acid tests.

[1] https://www.investopedia.com/terms/q/quickratio.asp

Can you explain that like you'd explain it to your elderly mother

> Can you explain that like you'd explain it to your elderly mother

Don't work for a tech company if you rely on wages for subsistence.

A little bit more detailed than that?

I used to work for the oil industry felt (and probably objectively is) far less stable.

Yeah, think like equity analysts during upturns, and in a downturn think like credit, ie. map out the sources and uses of funds.

The big caveat here is rising rates on floating rate debt, and the marginal response of revenue to higher rates.

There are other things to look at such as how resilient their business model is, their price/ earning ratio, etc. But in general, I would say those tech companies that have huge price swings during the pandemic are most likely to going have some sort of layoff. They are the ones that most likely over-hired.

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