We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Corporation with Lots of Cash - Essay Example

The doubt about the economic recovery is even more compounded with the recent development of Standard and Poors’ credit downgrade of United States from triple A credit rating to just double A. With how things are going, it is still not likely that the non-financial sector will be freeing that cash for reinvestment. To better understand why these companies are conservative with their spending, we have to consider the lessons they learned from the past financial crisis. Beginning with the dot com bust in 2000, companies with more cash were able to weather the crisis better than cash strapped companies hence is this conservative attitude. The same conservative attitude also helped them withstood the crisis when the recession broke in late 2007 and the eruption of financial crisis in 2008. Companies that were more liquid were able to get through the storm as they do not have to resort to lending which were not available then. Considering that the corporate landscape just recently came from these recent liquidity crunch, it will not be easy for them to shake off that “conservative mindset”. Having more money in their balance sheets meant that they are in a better position to make payrolls and purchase inventory and thus assure them perpetuity in business should the economic climate turns unfavorable again. These companies just do not feel that it is the right time to re-invest and expand. To quote Bob Kierlin, Chairman and founder of Fastenal Co., a Winona, Minnesota based company that sells

Check these samples - they also fit your topic

Multinational Corporation and State Relations in Emerging Markets (there are lots of other possible topics)
Multinational corporations (MNCs), on the other hand, are always looking out for new, emerging markets for their products. Usually the potential markets are also find in economies that are rich in raw materials and supplies and that have an large supply of labour at a low cost.
12 pages (3000 words)Essay
Today we can easily access the foreign brands anytime and anywhere. The corporations on the other hand are striving hard to satisfy our needs and demands. Now the question arises, who are “We”? “We” of course constitute the market. “We” are the customers.
4 pages (1000 words)Essay
Cash Accounting
VAT is an indirect sales tax, that you need to pay on various taxable products and services during their stages of production and distribution, which are based on the value added at those stages. To use cash accounting, you need to apply for it; rather you should make all necessary VAT returns.
2 pages (500 words)Essay
Centex Corporation Firm Analysis
The current downturn also has significantly increased competition among homebuilders, as evidenced by price reductions, increases in discounts and sales commissions to stimulate sales. Therefore, competition reduces number of property (homes) sales closings and reduces margins that lead to decrease in revenues on home sales.
2 pages (500 words)Essay
Johnny Cash
Partly of Indian descent, Johnny Cash was born in Kingsland, Arkansas on 26 February 1932 into the family of a poor sharecropper, Ray Cash. Little Johnny was raised in a shotgun shack in Arkansas’s cotton zone.
7 pages (1750 words)Essay
Corporations with lots of cash and doing little spending
First, we have to acknowledge that we are still in the process of recovering from the recent financial crisis. To understand that better, that crisis is not just about people losing their jobs and their homes or companies refusing to lend, but it is
2 pages (500 words)Essay
Corporation with cash and the economy
Depending on one’s point view, both perspectives can present a sound argument on which should come first, create jobs or encourage spending? Meanwhile, our country’s economy remains sluggish. The sad part of this
2 pages (500 words)Essay
Cash budjet
CBM will need extra cash financing from outside from March to June. The month requiring the highest outside financing is June while May requires the least outside financing. Short term cash deficits can be obtained
2 pages (500 words)Essay
Enquiry Concerning Human Understanding
In this topic, Hume is referring to the controversy that exists on the issues of free will and determinism. Hume argues that all human beings irrespective of whether they are learned or not face the challenge of the relationship between liberty and determinism. He traces the root cause of this controversy.
3 pages (750 words)Essay
Cash Flow
The direct versus indirect cash flows are only dealt with by the operations section. One can be able to identify, through the comparison between the operations
1 pages (250 words)Essay
screws, nuts, bolts and other construction supplies, “we’re saving our firepower for when opportunities might come up”. They are still in the stage of “wait and see” attitude if business will really pick up. For them, excess funds serve as an insurance to have the necessary liquidity to purchase the necessary raw materials and other inventory when the economy really picks up. According to Larry Ryder, Chief Financial Officer of Hooker Furniture Corp., “we don't want to tie our cash up to the point that we don't have the liquidity we need to accumulate inventory when we need it”. It may be a bad idea to keep so much money that does not create returns for the company. But considering the recent economic climate, there is also not much opportunity to deploy it. The economy is picking up painfully slow and the uncertainty is still there especially with the recent downgrading of the country’s credit rating. For now, company like Fastenal Co. is still peeved with reinvesting that it decided that it is better to pay dividends to shareholders than to expand. This overly conservative attitude might have been due to their skepticism of our policymaker’s ability to really resuscitate the company. The recent political debacle about the debt ceiling precipitated the recent credit downgrade of the U.S. which made the country a less attractive place to invest. The implication of this recent downgrade can also be disastrous to the economy as it will fuel further capital conservatism among companies as borrowing will become more expensive. The effect could be the same as the recent financial crisis in 2008 where financial
Cite this document
  • APA
  • MLA
(“Corporation with Lots of Cash Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/45305-corporation-with-lots-of-cash
(Corporation With Lots of Cash Essay Example | Topics and Well Written Essays - 750 Words)
“Corporation With Lots of Cash Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.net/finance-accounting/45305-corporation-with-lots-of-cash.
  • Cited: 0 times


Corporations with Lots of Cash It is quite unusual for an economy such as the United States who is still struggling to recover from an economic slump yet it has as much as $ 2 trillion in cash sitting in the private sector. If we are going to use Obama’s Stimulus Package as a benchmark which has saved and created over a million jobs with a mere $787 million, that $2 trillion dollars could have created over 3 million jobs…
Corporation with Lots of Cash
Read TextPreview
Comments (0)
Click to create a comment
Let us find you another Essay on topic Corporation with Lots of Cash for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us