Not too long ago investors and analysts viewed companies with huge cash balances as inefficient we almost took the supply of funds for granted. However the credit squeeze came much faster then anyone expected and is proving to be far worse then the street expectation, hope it doesn’t last very long (we are already in the 10th month but more on that later). Cash, in the current turmoil has turned out to be the most precious commodity and while corporates like Vedanta ($10bn in cash) and Microsoft ($21bn in cash) can survive for a few years without any business and would also be able to cash in on the opportunities that the downturn presents. Cash strapped companies,like the American automakers would be forced to restructure, cut costs and offload assets at throw away valuations. Liquidity would define corporate performance in these difficult times.
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