- What you want is a company with more cash than debt.

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What you want is a company with more cash than debt.

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What you want is a company with more cash than debt.

Friday, 26 September 2008

By Charles Delvalle
Over the past year, you’ve heard of the difficulties many corporations have had refinancing their existing debt. Not only are interest rates higher, but the likelihood of not receiving the necessary funds is very real.
In a market like this, you need to look for companies that have cash.

When a company has a lot of cash, they avoid most of the financing problems that debt-heavy corporations are facing. Plus, with cash on hand a company is able to support their shares by issuing big buybacks, increasing the size of their dividend, or both.

Also, if the economy does slow, cash-rich corporations are better able to weather the storm, since they have money left in reserves.

Over the next year, you should start seeing cash-rich corporations lead the stock market, while debt-heavy companies are left in the dust.

The easiest way to see how much cash a company has is to go to Yahoo Finance. Enter the ticker symbol of the company you are looking at, hit enter, and then look to your left hand side for “Key Statistics” Once there, just scroll down and you’ll see how much cash and debt a given company has.

What you want is a company with more cash than debt.

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