The global economy means that what happens in Europe won’t all stay in Europe. Some U.S. companies that have a large global presence overseas are expecting a negative impact as the European Union irons out their financial difficulties. That means that specific industries that service a large demand overseas will see a loss of revenue until the situation stabilizes. U.S. car makers that service Europe like General Motors know that despite the outcome, sales will be down. Exactly which industries take a hit depends on the amount of commerce a company does overseas, amongst other factors.

Industries Impacted

Everything from McDonald’s to IBM could end up suffering losses. Citigroup has identified at least 30 U.S. companies with major business transactions in Europe. Such well-known American companies like General Electric and Hewlett Packard are vulnerable to a slowdown in Europe. Electronic component and car companies are just the start of the potential impact of the European crisis. Food, tobacco, and beverage companies that sell overseas will also be impacted.

Debt-to-Capital Ratios

How much a company does business in Europe is just a small part of the equation. The risk of economic fallout increases with debt-to-capital ratios. In fact, companies with a debt-to-capital ratio of over 35 percent are much more vulnerable than those with lower ratios. The forecast for companies with a large exposure to the European market and large debt-to-capital ratios have lowered expectations on Wall Street in the next quarter.

More Repercussions for the U.S.

Aside from a lowering of demand on the European continent, the European crisis could also affect the value of the euro making it more competitive against the dollar when it comes to exports. The devalued dollar makes American goods cheaper than European goods, but if that changes, then even things manufactured in Germany (which have historically been expensive) will become a deal for neighboring Asian economies. This will impact export sales from the U.S. as well.