Source: www.breakingviews.com is Europe's leading financial commentary service.
Companies generally get into trouble when they run out of cash. Italian dairy producer Parmalat is different. It has lost the confidence of its investors by hoarding too much.
When it comes to barmy balance sheets, Parmalat's takes some beating. It has e3.6 billion of cash and investments. For reasons best known to itself, it has not spent this on reducing its e5.4 billion debt, even though interest on its borrowings exceeds that earned on its cash.
Now the company has been brought to account. It was forced to cancel a bond issue in March when the market turned against it. In three days, its shares lost a quarter of their value and the spreads on its bonds doubled.
Investors ran out of patience for a good reason. Parmalat had taken on too much debt to fund acquisitions - principally, it seems, because its controlling shareholder was reluctant to issue stock.
Investors are no longer happy to fund deal-making. And they are suspicious of highly indebted companies. Indeed, many thought Parmalat was hanging on to its cash because it wanted to do more deals.