Thomson Reuters Good Q3 Tough Balance Sheet

Thomson Reuters (TRI) reported some good looking Q3 numbers. Underlying profit up, margins up and revenues are up. Thomas H. Glocer, chief executive officer of Thomson Reuters even said the following “Moreover, our ability to translate profits into cash flow, supported by our strong balance sheet and liquidity, should allow us to take advantage of investment opportunities that may result from market disruptions while maintaining a disciplined approach to capital allocation,"

So let’s take a look at this balance sheet that is supposed to be providing all this strength. From Dec 31 to Sep 30 the following has happened:

1. Cash down from $7.5 Billion to $983 million
2. Intangible assets up from $3.4 billion to $8.5 billion
3. Goodwill up from $6.9 Billion to $18.7 Billion
4. Long term debt up from $4.3 billion to $7.4 billion

Yeah they are executing for now. But when the market cap is roughly $18 billion and the value of goodwill and intangibles is $27 Billion you just need to get skeptical about the whole picture.