What are the advantages of having a large cash balance? Please describe and provide examples. What are the disadvantages of having a large cash balance? Please describe and provide examples.

M5D1: Cash Flows

Prior to discussion activity you should:

1. Read chapter 11
2. Review module 5 powerpoint
3. Watch Video: Basic Cash Flow Statement: Using a Cash Flow Statement to Reconcile Net Income with Change in Cash [3.44 mins] (Links to an external site.)
   

Discussion Background

Prior to the financial recession in the late 2000s, some companies had built up significant cash balances. By 2010, discussions began about whether “cash hoarding” by firms was an appropriate activity or if it was hurting the economic recovery. Research this issue and answer the following questions:

• What are the advantages of having a large cash balance? Please describe and provide examples.
• What are the disadvantages of having a large cash balance? Please describe and provide examples.
• Research a publicly traded company that holds a sizable amounts of cash and liquid investmentson their balance sheets. Describe the company, the balance and how that balance has varied over the past three years.

Use the subject line as an advanced organizer to allow your classmates and the instructor to have some idea of what you’re posting is about, for example a subject line “response to discussion question” is not appropriate. Your responses to fellow students should contain substance, should be more than just opinion, and must go beyond a simple agreement or disagreement. Students are expected to provide at least (2) substantive responses to other students’ initial posts.

Consult the Discussion Posting Guide for information about writing your discussion posts. It is recommended that you write your post in a document first. Check your work and correct any spelling or grammatical errors. When you are ready to make your initial post, click on “Reply.” Then copy/paste the text into the message field, and click “Post Reply.”

To respond to a peer, click “Reply” beneath her or his post and continue as with an initial post.

Evaluation

This discussion will be graded using the discussion board rubric. Please review this rubric, located on the Rubrics page within the Start Here module of the course, prior to beginning your work to ensure your participation meets the criteria in place for this discussion. All discussions combined are worth 20% of your final course grade.