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Ford Net Debt Fallacy

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Ford (F) announced stellar Q3 results. The street has become excited about the possibility of a Zero net Debt position in the next quarter. While it is an important milestone will this be enough to secure the future. Assuming approximately $24 billion Ford now has a negative spread on its cash of approximately $480 million per annum. That’s half of your quarter’s improvement from last year. 

“This was another strong quarter and we continue to gain momentum with our One Ford plan,” said Ford President and CEO Alan Mulally.Yes they are generating cash which is a refreshing change for a major American automotive company. When will the market trust management to use the cash in operations?

Disclosure: George Gutowski writes from a caveat emptor perspective. I do not hold positions in any stocks mentioned in this post.