ShmoopTube
Where Monty Python meets your 10th grade teacher.
Search Thousands of Shmoop Videos
Finance: What is a Cash Cow? 0 Views
Share It!
Description:
What is a Cash Cow? Using the analogy of the cow who can be relied upon to produce milk regularly, the cash cow term is usually applied to a financial asset that generates regular cash flow and profits. The more obvious examples of cash cows are casinos and real estate in high rent areas. However, a reliable, dividend paying stock that holds value consistently, such as an Altria or Walmart may also be referred to as cash cow.
- Social Studies / Finance
- Finance / Financial Responsibility
- College and Career / Personal Finance
- Life Skills / Personal Finance
- Finance / Finance Definitions
- Life Skills / Finance Definitions
- Finance / Personal Finance
- Courses / Finance Concepts
- Subjects / Finance and Economics
- Finance and Economics / Terms and Concepts
- Terms and Concepts / Accounting
- Terms and Concepts / Banking
- Terms and Concepts / Company Management
- Terms and Concepts / Credit
- Terms and Concepts / Investing
- Terms and Concepts / Muni Bonds
Transcript
- 00:00
Finance a la shmoop what is a cash cow? that feels good [Person milking a cow]
- 00:08
mmm that's the spot yep that's me I'm a cash cow and boy howdy does that ever
- 00:14
feel good in the morning well I'm a type of company that's a natural part of the
- 00:19
business cycle and which kind of goes like this [Business cycle chart appears]
- 00:22
early companies are cash pigs those pigs eat everything including tons of cash
Full Transcript
- 00:27
and let me tell you what comes out of them
- 00:30
it ain't milk...young companies need cash capital to grow like to build server
- 00:35
farms yeah like that and you know different kinds of farms and oil rigs
- 00:40
and chemical synthesizing plants and tractors smelting factories and stamping
- 00:45
machines and massive robotic thingamabob makers those well those early companies
- 00:51
chew up tons of cash as they build their business early in their cycle building
- 00:56
revenues and they might burn, i dunno five million dollars in year 1 to make 1 [Stack of cash burning]
- 01:02
million dollars in revenues not profit that's just in revenues then they pig
- 01:06
out on 20 million dollars in losses in year 5 but by then maybe they have a
- 01:11
hundred million dollars in revenues then they begin to chill as they grow out of
- 01:15
being a pig into yes higher life-forms like me where they maybe start to break
- 01:20
even on 500 million in revenues and no losses and no profits just
- 01:26
breakeven and by the time they've truly evolved into me, way over here on the
- 01:31
bell curve of their lifecycle then they're producing tons of cash like this
- 01:37
CD company which now has three billion dollars of revenue in a billion bucks in [CD 'R' Us store appears]
- 01:42
cash profits unfortunately its future doesn't look all that great as revenues
- 01:47
have likely more than peaked and it'll produce a whole lot less cash in the
- 01:51
next decade as they you know kindly put it out to pasture so if it doesn't buy
- 01:56
more growth companies with its cash yeah then it becomes dinner [Butcher slicing meat and blood appears on camera lens]
Up Next
GED Social Studies 1.1 Civics and Government
Related Videos
What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...
What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...
How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...