What is an example of a type of company that would have a large amount of cash on hand and why. Also, what method of cash flow would be better for a company that has large amounts of cash direct or indirect method?
2006-12-05 12:45:12 · 5 answers · asked by angel_rat_83 1 in Business & Finance ➔ Investing
Usually it is not sound Economics to hoarde cash. It gives signals to Raiders to raid your company because it is a signal for bad management.
To find a company with large cahs tranche you will have to look in the Internet.
Both are better direct cash flows they will have and excess cash they can invest Short term or long term which will create indirect.
2006-12-06 03:34:26 · answer #1 · answered by Mathew C 5 · 0⤊ 0⤋
An example would be a company with a 'quick ratio' (first link) over 1. The quick ratio is quick assets divided by current liabilities. Quick assets are things the company owns that can be easily cashed. Current liabilities are things the company owes. The higher the ratio, the more money the company has.
On the second link (msn), you'll see Apple Computer has a quick ratio of 2.2. A company below 1 may be in more debt than they have money to pay for it all. Apple computer has 2.2 times more cashable assets than they owe in any debts. That is a very good 'fundamental' of Apple.
This ratio is part of a valuation method called Fundamental Analysis, and is a way many investors base their strategies on. That's the third link.
2006-12-06 00:45:45 · answer #2 · answered by trancevanbuuren 3 · 0⤊ 0⤋
Planning a little robbery are we? It reminds me of the story of the guy who was arrested for robbing a laundromat. He tried to pay for his bail with quarters.
I once made a killing on Nortel a while back. The stock was selling for about a half-dollar a share. I wondered why, wondered what others knew that I didn't because they had (at the time) about 8 billion in cash reserves. They could have paid cash and took the company private if they wanted to. I later got in and made some real good increases as they rose to more realistic numbers.
2006-12-05 21:10:57 · answer #3 · answered by Rabbit 7 · 0⤊ 0⤋
Banks, casinos, grocery stores, all business, with a lot of cash flow. Most use armored vans, for pick up or delivery, like Brinks.
2006-12-05 20:50:04 · answer #4 · answered by Kimberly H 4 · 0⤊ 0⤋
Look at Intel and Microsoft.
What kind of companies need lots of cash? First movers who need it as a defensive weapon to ward off competition.
2006-12-05 22:53:08 · answer #5 · answered by Ranto 7 · 0⤊ 0⤋