cash cow

noun

Definition of cash cow

1 : a consistently profitable business, property, or product whose profits are used to finance a company's investments in other areas

2 : one regarded or exploited as a reliable source of money a singer deemed a cash cow for the record label

Examples of cash cow in a Sentence

The football team was a cash cow for the university. The movie studio saw the actress as a cash cow.

Recent Examples on the Web

Judging by its peers, the longtime cash cow could have an enterprise value of around $65 billion. — Jacky Wong, WSJ, "SoftBank Burns Bright for a Tiger," 12 July 2018 Airports nationally face the prospect of a decline in the cash cow of parking revenue, amid the expansion of Uber and Lyft and potential for self-driving cars. — Kelly Yamanouchi, ajc, "Hartsfield-Jackson luggage cart contract pressured by industry shifts," 2 June 2018 For years, health systems rushed enthusiastically into expensive medical technologies such as proton beam centers, robotic surgery devices and laser scalpels — potential cash cows in the one economic sector that was reliably growing. — Jay Hancock, Washington Post, "As Proton Centers Struggle, A Sign Of A Health Care Bubble?," 2 May 2018 Punishments for Kansas would have to be mirrored across the country, from blue bloods to mid-majors to one-bid leagues, and would irrevocably harm the NCAA's biggest cash cow, which is the men's basketball tournament. — Sam Mellinger, kansascity, "Mellinger Minutes: Whit not an All-Star (?), Jeff Long and KU, Chiefs fears, Odom's crossroads," 10 July 2018 Rubio said the current system treats addicts and their insurance plans as cash cows. — Alex Daugherty, miamiherald, "Rubio wants to stop kickbacks that keep drug addicts perpetually in recovery," 5 July 2018 For years, health systems rushed enthusiastically into expensive medical technologies such as proton beam centers, robotic surgery devices and laser scalpels — potential cash cows in the one economic sector that was reliably growing. — baltimoresun.com, "Maryland Proton Treatment Center's restructuring reflects a bubble in health care investment," 3 May 2018 Likewise the Football Association will retain its Club Wembley cash cow. — SI.com, "Explaining Why the FA Selling Wembley Stadium May Not Be the Worst Idea," 13 May 2018 Reid’s old blog also took shots at her current colleague Rachel Maddow, who is MSNBC’s biggest star and cash cow. — Brian Flood, Fox News, "MSNBC, NBC News eerily silent as controversy builds over star Joy Reid's pre-fame blog," 1 June 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'cash cow.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Keep scrolling for more

Learn More about cash cow

Dictionary Entries near cash cow

Statistics for cash cow

Last Updated

25 Aug 2018

Look-up Popularity

Time Traveler for cash cow

The first known use of cash cow was in 1972

See more words from the same year

Keep scrolling for more

More Definitions for cash cow

cash cow

noun

Financial Definition of cash cow

What It Is

A cash cow is a business unit, product line, or investment that has a return on assets (ROA) greater than the market growth rate. The idiom refers to the idea that it produces "milk" (profit) long after the cost of the investment has been recouped.

How It Works

For example, let's assume that Company XYZ has five divisions, one of which makes widgets. The widget division manufactures and sells 85% of the widgets in the United States and has an ROA of 30%. The widget business, which is very mature, grows about 5% per year. In this scenario, Company XYZ's widget division is a cash cow. The low growth of the market means little investment is needed, and the high ROA indicates that profits in the division should be high -- higher than what is needed to maintain market share (this, incidentally, is why the excess cash generated by a cash cow doesn't need to be, nor should it be, reinvested in the cash cow).

Cash cows usually have large market shares in mature industries. The higher market share often implies or translates into the ability to produce at a lower cost, and for them, there is usually little reason to spend money on capturing more market share. It is possible, however, for a cash cow to dry up if competitors capture enough additional market share.

Why It Matters

Cash cows generate steady, reliable cash flows that often fund their own growth and the growth of a company's other business units. They can also generate the cash companies need to pay dividends or finance other endeavors. Importantly, they are often the reason lenders are willing to lend money to a company -- that is, the cash cow is the source of the lender's assurance that the company can service the debt. Thus, cash cows enable companies to leverage themselves in pursuit of other high-return opportunities.

Source: Investing Answers

cash cow

noun