Anfebious said:
SamuelRSmith said:
Anfebious said:
Sorry for my infinite ignorance but what does this mean? What happens if your company has the "junk" status? |
It refers to a rating of their debts. At junk status, the ratings agencies are basically saying that there's pratically zero chance that Sony will be able to pay back their debts.... so don't buy any Sony debt.
If Sony cannot sell debt (ie, bonds), then that means that they'll struggle to continue running at a loss (where revenue is less than cost), or to make major one-time investments without generating liquidity (getting cash) by selling assets (like when they sold their big buildings last year)
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Thanks for clarifying this for me! I'll have to look up some terms you used though, I'm a newbie at these kind of things.
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In very , very simple terms:
1. Sony is losing money right now.
2. The only way to keep the lights on, pay employees, manufacture PS4s, etc. is to borrow money from banks, raise it via the stock market, etc.
3. The rating agencies are telling any potential banks, etc., that loaning money to Sony right now is foolish because will not be able to pay it back.
4. When you can't generate revenue equal to losses (neve mind profit), and can no longer borrow money, you go out of business*.
*Or enter various flavors of bankruptcy which allows you to restructure or shutdown the company completely.
