Some companies carry a lot of cash on their balance sheets. This can be good -- or bad.
Companies with piles of cash have a lot of flexibility to act quickly when various opportunities arise. But many successful companies choose to manage down their cash balances to near zero. They use the money to buy back shares and acquire other companies, among other things. If they suddenly need some cash, they draw on lines of credit available to them.
You might be surprised at just how much cash some companies have on hand. As of September 2003, Microsoft
Fellow giant Wal-Mart
Different companies manage their cash in different ways, with varying degrees of success. It's not necessarily bad for a company to have a lot or a little cash, but if it has taken on a lot of debt, it had better be able to make those interest payments. And if a company has piles of cash, perhaps it could be putting those resources to better use. As some have argued in the case of Microsoft, it may make sense to use a pile or two to buy back shares (if they're valued attractively) or issue more in dividends to shareholders.
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