August 20th, 2010 by Dissolving Dollars

I keep on hearing the sound bite that companies are sitting on a large amount of cash and if they’d just spend it, the economy would turn around. Like most sound bites, it is not completely true. If you have a thousand dollars in cash, but have ten thousand dollars in debt, is the thousand dollars in cash really impressive? Of course not. And what if that thousand dollars was simply a result of refinancing at a lower rate? Is that impressive? In the big picture, that is what this talk about companies sitting on cash really means. Here is a good article that looks at the details.