A cash cow is a business, product or an asset that once required and paid off, produces consistent cash flows over its life span. It also refers to a company that is having big market share in slump or slow growth in industry. The idiom refers to the idea that it produces “milk” (profit) long after the cost of investment has been recouped. These companies generate much more revenue than what is required to sustain and is helpful in growth of the business. The cash generating qualities of these business are very high. They are also termed as most lucrative businesses. These businesses are dark horses of the race that only run to win.
Cash cows generate steady, reliable flows that often help in finding their own growth. Cash cow is the source of the lender’s assurance that the company can secure the debt. Thus, cash cows enable companies to leverage themselves in pursuit of other high return opportunities.