Why Do Software Developers Typically Have A Great Deal Of Cash And Retained Earnings On Their Balance Sheets?

I’m working on a case study for a business class in which I have to match balance sheets with industries. I have determined that this particular balance sheet is that of a software developer. However, I can’t explain why the cash would be about 60% of assets, and retained earnings is about 55% of the equity section. Any ideas? Thanks!

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One Response to “Why Do Software Developers Typically Have A Great Deal Of Cash And Retained Earnings On Their Balance Sheets?”

1. capwest5 says:

   June 28, 2009 at 10:45 pm

   A software developer doesn’t really need a whole lot of ‘hard’ assets like property, plant, and equipment. They need some of these, of course, but not as much as say a manufacturer of products. So that would tend to make cash have a higher % in the asset section.
   Don’t really have a great idea about the retained earnings % at the moment…