what is a cash cow 
a cash cow is one of the four categories quadrants in the growth share bcg matrix that represents a product product line or company with a large market share within a mature industry a cash cow is also a reference to a business product or asset that once acquired and paid off will produce consistent cash flows over its lifespan understanding cash cowsa cash cow is a metaphor for a dairy cow that produces milk over the course of its life and requires little to no maintenance the phrase is applied to a business that is also similarly low maintenance modern day cash cows require little investment capital and perennially provide positive cash flows which can be allocated to other divisions within a corporation they are low risk high reward investments cash cows are one of four quadrants in the bcg matrix a business unit organization method introduced by the boston consulting group in the early 1970s the bcg matrix also known as the boston box or grid places an organization s businesses or products into one of four categories star question mark dog and cash cow 1 the matrix helps firms understand where their business stands in terms of market share and industry growth rate it serves as a comparative analysis of a business s potential and an evaluation of the industry and market however some firms especially large corporations realize that businesses products within their portfolio lie between two categories this is especially true with product lines at different points in the product life cycle cash cows and stars tend to complement each other whereas dogs and question marks use resources less efficiently a cash cow is a reference to a business product or asset that produces consistent cash flow over its lifespan it s also a reference to one of the four quadrants in the bcg matrix a business unit organization method cash cow examplea cash cow is a company or business unit in a mature slow growth industry cash cows have a large share of the market and require little investment for example the iphone is apple s aapl cash cow its return on assets is far greater than its market growth rate as a result apple can invest the excess cash generated by the iphone into other projects or products cash cows such as microsoft msft and intel intl provide dividends and have the capacity to increase their dividend due to their ample free cash flows calculated as cash flows from operations minus capital expenditures these companies are mature and do not need as much capital to grow they are marked by high profit margins and strong cash flows cash cows can also be slow growth companies or business units with well established brands in the industry special considerationsin contrast to a cash cow a star in the bcg matrix is a company or business unit that realizes a high market share in high growth markets 1 stars require large capital outlays but can generate significant cash if a successful strategy is adopted stars can morph into cash cows question marks are the business units experiencing low market share in a high growth industry 1 they require large amounts of cash to capture more of or sustain their position within the market depending on the strategy adopted by the firm question marks can land in any of the other quadrants lastly dogs are the business units with low market shares in low growth markets 1 there is no large investment requirement and they don t generate large cash flows often dogs are phased out in an effort to salvage the organization 