cash cow

Cash Cow

1. One of the four categories (quadrants) in the BCG growth-share matrix that represents the division within a company that has a large market share within a mature industry.

2. A business, product or asset that, once acquired and paid off will produce consistent cash flow over its lifespan.

Notes:

1. A cash cow requires little investment capital and perennially provides positive cash flows, which can be allocated to other divisions within the corporation. These cash generators may also use their money to buy back shares on the market, or pay dividends to shareholders.

2. A metaphor for a dairy cow that produces milk over the course of its life and requires little maintenance. A dairy cow is an example of a cash cow, as after the initial capital outlay has been paid off, the animal continues to produce milk for many years to come.

See also: BCG Growth-Share Matrix, Dog, Loss Leader, Porter's 5 Forces, Problem Child, Star

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Cash cow

A company that pays out most of its earnings per share to stockholders as dividends. Or, a company or division of a company that generates a steady and significant amount of free cash flow.

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cash cow

A business or a segment of a business that produces significantly more cash than it consumes. As an example, a firm may sell a product that requires minimal advertising and promotional expenditures but continues to generate revenues year after year. Firms sometimes use cash cows to provide cash for financing other segments of their business.