When Debt Is a Good Thing

Earlier this week, I discussed why investing in highly indebted companies is one sure way to sink your portfolio. As I expected, I got a flurry of emails asking me what debt levels are acceptable for various companies in various industries and if I have a certain debt percentage that I stick to.

The common mistake many investors make is looking at debt as a percentage on a balance sheet as opposed to a source of capital for a business. In other words, the indebtedness of a company should be viewed in the context of the cash flow statement. Since the use of debt capital is a financing decision, one needs to look at the cash flow statement in answering the question of whether or not debt is a good....522 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.