No More Netting

Reading many of the analyst reports, we were always intrigued by the use of net debt in leverage calculations. Perhaps it made comparisons between companies easier. But the underlying assumption that cash would be used on a dollar for dollar basis to pay down debt as implied was always a question mark. Surely this is highlighted by today’s dry bulk earnings, which are currently below cash breakeven rates. With insufficient cash to meet voyage and operating expenses no less debt service, the cash on hand is making up the shortfall. We suppose you can make the case for the use of net debt in good times, however, as we were all rudely reminded recently the shipping cycle never left us. Either it unexpectedly returned, due to a short-lived new paradigm

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