Many large companies are currently sitting on huge sums of cash. Business theory says that excessive cash should be re-invested or paid out as dividends to shareholders. This article from the Globe and Mail explains why some companies think that this particular theory is not in their best interests.
The sums are almost too large to fathom. Microsoft Corp. and Exxon Mobil Corp. each have more than $30-billion (U.S.) in cash sitting in the bank. Apple Inc. and Google Inc. have more than $10-billion.
And they’re not alone.
A record gusher of profits has left Corporate America flusher than ever and, oddly, a lot stingier too.
Companies are choosing to keep much larger cash reserves than ever before, rather than paying out profits in the form of dividends, or reinvesting in their businesses and paying higher wages.