Toyota's $53 Billion Cash Pile Could Be Better Used
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Investors will typically demand that a company find ways to productively use cash or return it to shareholders through higher dividends or buybacks. What they don’t like is for management to sit on a mountain of it.
Here is a chart showing how Toyota Motor Corp. has kept a big war chest for acquisitions or a buffer for mistakes even as its return on invested capital (ROIC) -- a measure of how well a company is using its money to generate returns -- has declined for the past three quarters when compared to the cost of that capital. Toyota had cash, equivalents and short-term investments of 5.9 trillion yen ($53 billion) as of March 31, according to data compiled by Bloomberg.