Cash-Rich Companies

The answer to last week's quiz question is that Exxon Mobil has the most cash of major blue-chip corporations (not surprising when you consider the meteorically-rising price of oil). Others cash-rich firms include Toyota, Microsoft, Apple, IBM,  Hewlett-Packard, and Johnson & Johnson.

Why is it important? Companies with a lot of cash on hand have a big advantage. It guarantees them a degree of flexibility. They can acquire a struggling competitor, for example. In a bear market, they can buy back shares of their own stock to halt a slide -- a ploy IBM has successfully deployed ever since the Louis Gerstner years in the early 1990s.