Motley Fool Money 6 Companies, 4 Strong Balance Sheets
Apr 23, 2022
Bill Mann, a seasoned Motley Fool analyst, dives into the world of strong balance sheets and financial health. He discusses the surprising cash strategies of retailers and how some companies thrive with substantial liabilities. The conversation highlights major players like Costco and Alphabet, showcasing their cash management skills. Mann also addresses the financial challenges faced by Rite Aid and Norwegian Cruise Line, emphasizing their troubling debt situations and the impact on long-term viability.
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Costco's Fortress Balance Sheet
- Costco's strong balance sheet and working capital management are impressive.
- They generate cash from their balance sheet due to a negative cash conversion cycle.
Costco's Negative Cash Conversion Cycle
- Costco sells inventory in days, but pays vendors weeks later.
- This negative cash conversion cycle means vendors finance Costco's growth.
Alphabet's Financial Strength
- Alphabet boasts a strong balance sheet, with high cash reserves and low debt.
- Their net cash position offers a security blanket and investment opportunities.