Cash Cow

In finance, the term cash cow is used to define a product line, business unit or even an investment that will generate a high return on assets which is greater than the growth rate in the market. The idiom refers to the notion that profit will be generated from the asset or investment long after the cost price has been covered. The dairy cow is referred to as the cash cow that gives milk throughout its life span without having the need to spend much on its maintenance. Usually, cash cows occupy a large share in the market in reputed industries. The usefulness of cash cows is that it is useful in generating reliable and steady cash inputs that not only fund their own growth, but also help in financing other units of the business. The generated cash can be used for buying back the shares in the market and also for paying dividends to the shareholders.

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Edited and Updated 31st May 2014

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