Despite the growing belief (and widespread evidence of proof) that we may borrow our way into heaven, McGraw-Hill Publishing (MHP) still retains its debt-free status. MHP is a powerhouse company with three divisions: the financial services of Standard and Poor's (S&P), the educational division and the information/media section owning Businessweek. MHP's financial metrics are superb.
MHP's debt-free status is especially noteworthy, as MHP has a steady stream of income and thus is highly "leverageable." Further, MHP arguably employs the best and the brightest analytical minds in its S&P business who could capably access this leverage. After all, MHP rates over 90% of U.S debt issued. (Most debt issues require two rating agencies, so MHP and Moody's generally get the nod.)
Interestingly, while Wall Street cries for higher leverage and employs S&P analysts to ascertain and bless these "optimal" capital structures, these same analysts are employed by a company that remains steadfastly debt-free. When it comes to employing debt, it may be good to remember the country music lyrics, "all that glitters may not be gold."
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