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Do companies physically warehouse cash? No, they deposit it in the banking system, or buy treasuries with it, right? It's being invested in the world economy, j

• gumby 8y ago
  True, but what about cash in excess of what you need to keep for operations? You’ll want to put a reserve in something safe, like treasuries. You’ll want to invest some in somethingnhigher Heike for opportunistic needs, like an acquisition or, in Apple’s case, locking in pricing with suppliers (most companies can’t afford that). But if you have more than that? Might as well return to shareholders since they aren’t investing in you for your stock market prowess, but for your computer manufacturing and sales prowess. Apple had a problem for a while with that middle category: they were the fastest growing large cap stock so there wasn’t anything better than their own stock to buy. This is an interesting problem to have. Imho they still should have paid out more dividends, but what they did was probably more tax advantageous.