Building on the research summarized in an earlier post “The Value of Surplus Cash“, we assembled the results into a simple and easily understood framework; the result is published in CFO.com: “The Value of Cash“.
We hope you find the article interesting and useful reading.
Optimizing financing policy includes deciding how much liquidity a company should carry. In this post we find the value of an extra dollar of cash on the balance sheet.
Answer: nothing.
If you invest in a private equity fund, the general partner is tasked with investing your funds. If she can’t find anything to buy, she returns the unused capital, shrinking the fund. This is the economic equivalent of a share buyback. Distributions of this sort don’t buy anything.
But the word buy in share buyback can be confusing. [Read more…]