As we all know that coronavirus is spreading all over the world like a wildfire that stops for nothing and destroy each and everything. This virus is spreading vastly in a nanosecond. It has disturbed even the biggest companies in the US; as a result, they are cutting their spending. This proved that cash is the biggest king. It has power, especially now, in the time of this crisis.
Financial Loss to Companies by Coronavirus
The US has made significant progress. We can have an idea about this progress from the mentioned companies. For example, we all know that this is a time of crisis, but Apple Inc. ended its last year with 247 billion dollars. This amount is more than enough if even a single iPhone is not sold.
Moreover, Discount Retailer Dollar General Corp. possessed 240 million dollars that are enough even if the shops are closed for four days. Dollar General said that its business model could generate important cash flow so that this cash can rotate in economic cycles and can be used in the time of crisis. But the Apple Company declined to make any comment in this regard. As far as technology companies are concerned, they use more cash on hand than the retailers who do not use more cash on hand.
Mega Companies’ Role to Back up National Economy
However, they have unsold inventory and have assets in that form. So that technology companies can donate a lot of money in case of any crisis. Now we all know that Corona is a burning issue. So these companies are donating a lot of money to help humanity and to save their country from this devastating virus. If the companies close their shops, they can earn much of the money because they have a planned economy. They are much prepared for any kind of economic or financial stress. So this crisis doesn’t matter to them so. Ron Graziano said that the mindsets of the investors had converted promptly to the balance sheet that helps a lot in the time of crisis.
Stimulus Package Against Coronavirus
Another method by which the companies made their economy stronger is that they used their cash, which was used to repurchase their own products. So in this way, they get a lot of benefits. For instance, in 2019, the companies present in the S and P 500 spent about 729 billion dollars on repurchasing their shares. This was a second record to the record of 2018, in which 806 billion dollars were spent. But now, due to the pandemic of Coronavirus, President Trump made many restrictions on repurchasing the shares. So that this can be used as a stimulus package against coronavirus. The wounded Industries could have in this way.
In the US, the health department, which distributes medicines and other supplies related to health to the people, had the ability that it can use 40 billion dollars at the end of December. So in this crisis, this department also distributed many dollars for the betterment of the people. Moreover, the company of us, which makes Haggis diapers clinics tissue and other products, stated that they have the liability of 77 times the size of its shareholders.
Encouraging Aspect for the US Economy
American Companies; A Sign of Hope
It means that they can also donate a lot. The companies that came into the market this year with investment-grade credit ratings are still reporting net cash and some assets that are enough to operate in the time of crisis to help the people and to stabilize the extreme scenario. It will be a great help in this time of crisis. If Apple didn’t sell even a single iPhone, it could be able to run for 492 days. These days they will continue to make their products. These figures, which have been mentioned, are only rough estimates. There can be some ups and downs. But the main idea is that the US economy is so much stabilized that they can donate a lot of money in the time of crisis, and hence it is true that cash is the greatest king of all in every crisis.
