Question

How does Samsung (the phone company), respond to Apple having the issue of too much excess cash on their balance sheet? Is there any information in the news about Samsung saying anything but the accounting issue of Apple?

Accounting issues? One of the biggest problems Apple faces has been dealing with its balance sheet. Amazingly or strangely, this issue started with the principle that Apple holds too much cash. Even though this does not sound like a problem, it is. By having too much cash, Apple is wrongly allocating this resource, or not having enough assets. This will generate issues that can diminish Apple's value.

Answer 1

Yes, excess cash is creates issues like generally anything having in too much or negative have. Therefore excess cash is often just bad as holding excess debt. Some of the consequences of excess cash in the company are:

1. It will increase shareholder's value, if company do not have any future project.

2.It also increase the increase need to pay on outstanding debt.If it is in the form of Loan or short term Bonds

3. It also looks like that the company is failing to invest in new ventures.

4. If company hold excess cash and put out of circulation then it also causes recession in market. Because the money is blocked and not in rotation in market.

5. If there is an excess cash in the balance sheet. In some cases, investor are bit furious and the balance sheet also looks inefficient. Due to improper allocation of fund or resources. It also worried to investor sometimes. Also, at some of time, the investor will not get the proper return.

The better ways to manage the limited cash are:

1. Time to time investment

2. Repayment of debts

3. Declaration of dividend to attract investors

4. Invest in to new ventures or new projects.