Cash-rich companies in low-growth, declining industries have to diversify to avoid having to pay huge costly dividends to shareholders.

Question

Quizplus · Accepted Answer

Diversification is one strategy to manage excess cash, but companies can also choose to reinvest in their core business, buy back shares, reduce debt, or indeed pay dividends. The decision depends on the company's strategy, market opportunities, and shareholder preferences.

Cash-Rich Companies in Low-Growth, Declining Industries Have to Diversify to Avoid