Independent Strategy

Covid and cash flow

Even before the Covid-19 crisis, about one quarter of US quoted corporations were cash flow negative. This is because they are either zombie corporations, kept alive by central banks’ mispricing of capital; or “hope” companies, like Uber or Netflix, which spend far more than the cash they generate. Of course, investors and bankers were throwing money at “hope” companies as they promised the glamour of growth over mundane old profits. In this pandemic shut down, these firms are going to slide into an even deeper cash flow hole though, finding it harder to finance their deficits.

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