3 ms·
When a company (or anybody) has cash can do 4 things. (Assuming that the level of debt is sustainable.) 1 reinvest in new projects 2 put the cash on safe assets
by asino 6y ago
When a company (or anybody) has cash can do 4 things. (Assuming that the level of debt is sustainable.)
1 reinvest in new projects
2 put the cash on safe assets (bonds)
3 buyback
4 give back as a dividend
Buyback is more tax efficient than dividends.
What would you have done,if you were Boing CEO?
- wonderwonder 6y agoYour comment is missing the point that you can do all of these things at once. They could easily put 80% into safe assets / employee 401ks, new project funds etc. and then spend 20% on buy backs. The focus on buy backs is due to the fact that American business ties executive bonuses to share valuation.
- gshdg 6y agoThe GP’s point is that the system that incentivizes this is flawed and needs to change. Do you disagree?
- michaelt 6y ago> What would you have done,if you were Boing CEO? If you're Microsoft or Apple or Google, the answer is "Hold hundreds of billions of dollars of cash" [1] That article, from late 2019, feels such holdings are in need of explanation; today, they seem like common sense. [1] https://www.cnbc.com/2019/11/07/microsoft-apple-and-alphabet-are-sitting-on-more-than-100-billion-in-cash.html https://www.cnbc.com/2019/11/07/microsoft-apple-and-alphabet...