Re: Biggest things you look for in a stock?
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Comparing cash to the amount of debt a company has decided to take on does not really say anything about profitability. Also, theoretically, a company will do the best if it takes on as much debt as possible as long as it can safely handle it and a favorable return can be achieved.
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You pretty well summed up my view on this. Good management knows how to handle debt. If the debt is taken on with specific purposes, and there is a high likelyhood that those purposes will generate returns above and beyond the cost of the money borrowed, then pile it on. This, of course, is not as simple as I make it sound. I personally wouldn't fell comfortable borrowing money just to re-invest it, but there are some who can. My only concern is if I fell like the money borrowed is primarily used to give the appearance of having more money than you really do, or to be able to give investors a higher return than they really should be getting.
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