UK Accounting Glossary
A cash cow represents the division of a company that provides a steady and significant cash flow. A cash cow tends to operate in a mature industry with little competition. A cash cow requires minimal ongoing investment and the cash flow that a cash cow provides tends to be used to support other divisions and ventures. For example, the Microsoft Windows operating system could be considered a cash cow. This division employs a relatively small group of people (low cost) yet produces a very significant cash flow. Microsoft uses this cash cow to fund other ventures such as gaming consoles. The basis for the phrase ‘cash cow’ is the dairy cow which (after purchased) can be milked for a relatively long time with little cost.
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This glossary post was last updated: 4th February 2020.