Fiat leaving car business?

I read a few years back that even if Fiat stopped all motor manufacture in Turin it would make only a very small dent in the Torinese economy, so diverse is it.

We tend to think: Turin = Fiat. It ain't so.

I'm not a business finance or accountant but the figures looked fairly healthy.

Operating margin is low, for sure, but that is after financing their 5.8b debt. More importanly is their liquidity, i.e. 8.5b, up 2b on previous quarter. They could easily pay off that 5.8b debt but choose not to. The debt will give them tax advantages, and with money in the bank they have room to manoever, invest etc. without increasing the debt.

Of course ....... I also know that most company accounts are all smoke and mirrors and we know exactly where that got the banks

Healthy?? Yeah, the Q3 report shows plenty of big numbers but it may have escaped your notice that the majority of them have a minus sign in front . They are keeping their heads above water but its at the expense of drastic cutbacks in production and overheads.

Liquidity is dead money, not an indicator of performance, its whats in the current account not the saving account. Its cash in hand earmarked to cover the day to day running costs of the business, like wages, suppliers, factory costs etc. Look at it as money owed. That figure of 8.5b tells me its close to what it costs per quarter to run the business. The fact it has increased when turnover and profit has decreased is not good!

If they wanted to suddenly draw 5b out of liquid funds to pay their debt off they would have to reduce quarterly operating costs by the same amount or they wouldnt be able to pay their bills.......its impossible!

Remember this?
http://in.reuters.com/article/consum...9+RTRS20090303
Lack of liquidity is what almost took Vauxhall/Opel under, they simply ran out of cash.