Berkshire Hathaway Annual Shareholder Meetings (since 1994) cover image

2016-Afternoon Session-BRK Annual Shareholders Meeting

Berkshire Hathaway Annual Shareholder Meetings (since 1994)

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Managing the Working Capital of a Business Segment So Large and Expansive

The year in balance sheet for manufacturing service and retailing operation shows total current assets of 28.6 billion, of which cash and equivalents are 6.8 billion. Meanwhile, total current liabilities are 12.7 billion, implying net working capital of 15.9 billion. It has become increasingly common for companies like Apple and Dell to finance their business via their suppliers in some cases with negative working capital. Why is it necessary for these Berkshire businesses to have so much working capital, particularly so much cash? More generally, how do you think about efficiently managing the working capital of a business segment so large as this one?

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