Large cash balances crucial for knowledge-based companies to sustain value-added investments.
The article discusses why some companies, like Pfizer, keep a lot of cash on hand even when they could use debt to grow. These companies have a lot of valuable but hard-to-measure assets, like research and development, that need protection. By keeping cash reserves, they can weather tough times and keep investing in these assets. This strategy helps them maintain high stock prices and stay strong in the long run.