cash-flow calculation. Excess cash is the cash over and above what a
company needs for current operations. Companies sometimes stockpile
cash and marketable securities to weather an industry downturn or to
prepare for a large acquisition. Nonoperating assets can represent a sig-
nificant percentage of a company’s stock price. For example, in Novem-
ber 2000, cash and marketable securities accounted for between 30 and
56 percent of the stock price of AMR, Apple Computer, Bausch &
Lomb, Delta Air Lines, Ford, and General Motors.
11
A company’s cash
requirements for its daily operations vary from industry to industry—
from 1 percent of sales for stable businesses ...