Many corporation over the past couple of years have built up cash reserves, some Bank Governors are suggesting, the companies should either use the cash in their business, make acquisitions or return the money to the shareholders. The perspective for Bank Governors is if one person has money in their account it is good, because the rest are spending., If everyone has cash in their accounts, who is spending?

With a dividend paying company bias, the sentiment of returning the money to the shareholder sounds terrific. Much of the world is a balance – we try to have work – life balances, companies follow the same principle. In the low interest rate environment we are in, having debt at low rates is a good thing, having too much debt is nasty. Generating lots of cash is a good thing, searching for opportunities is a good thing, there should be a lag between searching for opportunities and spending the cash but what is the correct amount of time?

Ideally, companies should be searching for opportunities all the time. The company should have a reasonable idea of where it would like to grow, if the price is right. One presumes, slowly coming out of a world wide recession, if the price is not right now when will it be? If the answer is I do not know or maybe in the future, the writer is in favour of returning cash to shareholders.

There are always more questions than answers, till next time – to raising questions