Question

In: Accounting

Apple Inc., Microsoft Corp., Berkshire Hathaway, and Facebook have all been identified as companies that have...

Apple Inc., Microsoft Corp., Berkshire Hathaway, and Facebook have all been identified as companies that have accumulated substantial sums of cash. For this discussion:

  • Select one of these companies and review their latest Balance Sheet and Statement of Cash Flows.
  • Suggest at least two (2) advantages and two (2) disadvantages of companies accumulating cash hoards.
  • Provide a rationale for your suggestion.

Solutions

Expert Solution

Toyota

The company “Toyota”, automobile manufacturers is consider among the top companies that have accumulated a lot of money in the hoarding of a growing cash reserve.

We can highlight following two advantages of companies accumulating cash hoards as under,

(1) Cash hoarding is reflecting the company with strong business performance in the market. It means that the company strategy  has been working  as  planned and the product offered  has  acquired  excellent  demand  by  consumers.

(2) Second advantage is that it cash hoard it can be used as a buffer against bad times. In situation of the poor economic time or an acquisition didn’t go the way it was planned, the company who has buffer stock of cash or cash hoarding will have sufficient money to recover or maintain while planning new strategies.

We can highlight following two disadvantages of companies accumulating cash hoards as under,

(1) The main disadvantages of Cash Hoarding is negative impact on ‘expected share price’ performance as investors claim companies were defined as ‘cash hoarders’ that had over 15% of their ‘total assets’ in cash and cash equivalents on average over the last 10 years. Such type of companies unable to deliver a higher rate of return by deploying excess cash– must return cash to shareholders and not squander it

(2) The second disadvantage Cash Hoarding are a Dearth of attractive investment opportunities. If the company is not attracted to invest in another company, equipment or new system, it will be holding the cash and the company will be using the same old equipment. The company might be afraid of expanding

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

The five largest tech companies (Google, Apple, Facebook, Amazon, Microsoft or GAFAM) now make up 20%...
The five largest tech companies (Google, Apple, Facebook, Amazon, Microsoft or GAFAM) now make up 20% of the S&P 500 (the market portfolio). This problem aims to quantify the consequence of this increasing concentration for investors. We assume that the entire security market is made of only three types of assets: a risk-free asset (rf = 3%) and two risky securities G (a portfolio composed by investing in the ve GAFAM stocks) and B (a portfolio composed by investing in...
The five largest tech companies (Google, Apple, Facebook, Amazon, Microsoft or GAFAM) now make up 20%...
The five largest tech companies (Google, Apple, Facebook, Amazon, Microsoft or GAFAM) now make up 20% of the S&P 500 (the market portfolio). This problem aims to quantify the consequence of this increasing concentration for investors. We assume that the entire security market is made of only three types of assets: a risk-free asset (rf = 3%) and two risky securities G (a portfolio composed by investing in the five GAFAM stocks) and B (a portfolio composed by investing in...
The 5 stocks are as follows: Microsoft, Amazon, Macy’s, Facebook, and Apple. Create a portfolio that...
The 5 stocks are as follows: Microsoft, Amazon, Macy’s, Facebook, and Apple. Create a portfolio that invests 24% of $1 million in company A, 22% in company B, 20% in company C, 18% in company D, and 16% in company E. What is the buy-and-hold return (HPR) for each of the 5 stocks and for the portfolio during the last calendar year (2018). This means you are buying on Dec 31, after markets close, and selling on Dec 31 of...
The stocks are as follows: Macy's, Microsoft, Amazon, Facebook and Apple. Create a portfolio that invests...
The stocks are as follows: Macy's, Microsoft, Amazon, Facebook and Apple. Create a portfolio that invests 24% of $1 million in company A, 22% in company B, 20% in company C, 18% in company D, and 16% in company E. What is the buy-and-hold return (HPR) for each of the 5 stocks and for the portfolio during the last calendar year (2018). This means you are buying on Dec 31, after markets close, and selling on Dec 31 of the...
"Cash Flow Statements and Cash Hoards" Please respond to the following: Apple Inc. and Microsoft Corp....
"Cash Flow Statements and Cash Hoards" Please respond to the following: Apple Inc. and Microsoft Corp. are identified as companies that have accumulated substantial sums of cash. Microsoft and Apple increased dividend payouts and acquired treasury stock to return some of the excess cash to shareholders. Use the Internet and/or Strayer Learning Resource Center to identify one (1) additional large company which is currently accumulating a cash hoard. Next, evaluate how the company identified in your research can use the...
Continuing from our PBL questions... After your first rigorous acquisitions meeting at Berkshire Hathaway, you've been...
Continuing from our PBL questions... After your first rigorous acquisitions meeting at Berkshire Hathaway, you've been seconded to evaluate two business leases in a famous shopping centre in Australia, Chadstone. A 200 square meter retail shop space, currently occupied by Louis Vuitton is up to renewal today. Louis Vuitton wants to renew the lease today and is offering $1.2 mil p.a. in advance for 5 years. Chadstone property management has another bid for the space by Prada, who wishes to...
In networked world dominated by the GAFAM (Google, Apple, Facebook, Amazon and Microsoft) and BATX (Baidu,...
In networked world dominated by the GAFAM (Google, Apple, Facebook, Amazon and Microsoft) and BATX (Baidu, Alibaba, Tencent and Xiaomi) tech giants it is better for new tech start-ups to either plug-in, or partner with them instead of competing head-on or differentiating.Develop a viable, ethical, legal, and profitable E-commerce business idea for the Pakistani market that integrates and uses specific AI enabled technologies and VR / AR platforms offered by GAFAM and BATX by using either plug-in, or partner strategy....
I have Stock Return of two Companies MSFT(Microsoft) and APPL (Apple).It is mentioned in the given...
I have Stock Return of two Companies MSFT(Microsoft) and APPL (Apple).It is mentioned in the given Table.The Question is : ' ''We would also like to check whether both stocks (Apple and Microsoft) have the same return on average. Using the confidence interval approach, perform and present an appropriate hypothesis test at the 5% level of significance, and interpret your result. Which stock would you prefer and why? [Hint: Hypothesis test about two population means. Zero marks if you test...
Several commentators believe that Apple Inc. (Apple) exemplifies how multinational technology companies have exploited tax codes...
Several commentators believe that Apple Inc. (Apple) exemplifies how multinational technology companies have exploited tax codes that were written for an industrial age and are unsuitable for the modern world’s digital economy (Duhigg and Kocieniewski 2012). Some earnings at corporations like Apple are not created from tangible products, but rather from intellectual property, such as the patents on the software that makes electronic equipment operate. In other cases, the merchandise items themselves are digital, such as downloadable music. It takes...
Following are the 2016 income statements for Apple Inc. and Microsoft Corporation, competitors in the computer...
Following are the 2016 income statements for Apple Inc. and Microsoft Corporation, competitors in the computer industry. Use these financial statements to answer the required. APPLE INC. Income Statements (in millions) Sep. 24, 2016 Sep. 26, 2015 Sep. 27, 2014 Net sales $ 215,639 $ 233,715 $ 182,795 Cost of sales 131,376 140,089 112,258 Gross margin 84,263 93,626 70,537 Operating expenses: Research and development 10,045 8,067 6,041 Selling, general and administrative 14,194 14,329 11,993 Total operating expenses 24,239 22,396 18,034...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT