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The debt of major French groups: changes and financing choices

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  • Hélène Charasson-Jasson

Abstract

The financial crisis has generated renewed interest in the question of companies’ financing choices, and especially those of the largest firms which have greater latitude in this regard. In order to assess the debt of the major groups it is necessary to analyse (i) the relative share of equity and financial debt in financing the groups’ economic assets, (ii) their debt repayment ability and (iii) the relationship between debt and investment, as the latter allows for future income growth. We have observed an improvement in the solvency of major groups after they shored up their equity. However, they are struggling to generate a greater increase in their operating cash flow than that of their net debt. As a result, we analyse the extent to which the new debt of French groups can be used to finance investments that would boost future income. In 2016, new financial debt was used more to finance investment in acquisitions than investment in tangible and intangible assets.

Suggested Citation

  • Hélène Charasson-Jasson, 2017. "The debt of major French groups: changes and financing choices," Quarterly selection of articles - Bulletin de la Banque de France, Banque de France, issue 48, pages 73-90, Winter.
    • Handle: RePEc:bfr:quarte:2017:48:06
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    financial debt; cash; equity; goodwill; repayment; ability; investment;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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