What is a Cash Cow?

A Cash Cow refers to a business, a product or an asset which when acquired and paid off further gives constant cash flows throughout its life. It is often referred to in an industry which shows slow growth otherwise. It is one of the categories in the growth matrix given by Boston Consulting Group. Very less investment capital is required to support the cash cow and it continually gives positive cash flows throughout. Latter usually find a place in other verticals of the parent company.

The rate of return from the cash cow is higher than the market growth rate. The cash is usually channelized to fund research and development activities, service debt and also stimulate market share.

Tags: , , , , , ,