how is it that in times of crisis major businesses will go bankrupt within months? Do they have no savings or what?
In: Economics
In a lot of ways, it simply doesn’t pay to have cash sitting around. Companies work from year to year and often to avoid taxes etc it works out better for them to give bonus to staff, pay dividends to shareholders, invest in new operations, expansion etc.
There is no real business incentive to have a ton of cash reserves.
That means when a crisis comes along lots of business can only survive for a few months.
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