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Microsoft, Qualcomm, and Google’s Cash / Working Capital Management Strategies

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1. Microsoft Corporation: At the end of 2003 Microsoft was sitting on a $49 billion mountain of cash, amounting to more than 60 percent of the company’s total assets. The company kept $1.3 billion in the bank to support day-to-day operations and invested the surplus as follows:



Commercial paper

$0.9 billion

U.S. government and agency securities


Municipal securities


Certificates of deposit


Money-market mutual funds


Foreign government bonds


Corporate notes and bonds


Mortgage-backed securities



$49.0 billion


2. Qualcomm: Asked to explain his company's success at driving down working-capital levels, Qualcomm CFO William Keitel demurs, saying, "You can always do better." He's not being humble so much as capturing the dominant theme for working capital over the past several years. In 2005, for the fourth consecutive year, the 1,000 largest publicly traded companies in the United States managed to reduce the amount of money they had tied up in working capital as a percentage of sales. The company has achieved reductions by improving customer communication, others by adjusting their collections processes, and yet others by tying incentive compensation more closely to a successful reduction in working capital.

3. Google: At the end of 2005 Google was sitting on a cash mountain of near $4 billion compared to $450 million at the end of 2004. The $4 billion is almost certainly far more than Google needs to meet any seasonal fluctuations in its capital requirements. Such firms with a surplus of long-term financing never have to worry about borrowing to pay next month’s bills or making investments and are consider potential candidates for acquisition. What caused this increase? Did the extra cash come from Googles additional long-term borrowing? From reinvested earnings? From cash released by reducing inventory? Or perhaps it came from extra credit extended by Google’s suppliers. The correct answer? All of the above.

Most companies do not have the luxury of huge cash surpluses like Microsoft or Google, but they also park any cash that is not immediately needed in short-term investments. Likewise companies like Qualcomm have tuned there collection and credit policies to effective manage working capital requirements.

Companies can learn from the best practices followed by financial managers at Microsoft, Google or Qualcomm. The company should regard a planned cash balance of zero as driving too close to the edge of the cliff. They should establish a minimum operating cash balance to absorb unexpected cash inflows and outflows. Also Companies can improve customer communication, adjust their collections processes, and use incentive compensation more closely to a successful reduction in working capital.


YouSigma. (2008). “Microsoft, Qualcomm, and Google’s Cash / Working Capital Management Strategies." From

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