Write a 1 page essay on Why social network industry has no inventory and large cash in balacesheet.
Lack of need for inventory therefore explains absence of inventory from accounts of companies in the industry.
The industry is also profitable, based on trend in technology that makes its products marketable and low costs. These lead to high proceeds and therefore high value of cash and cash equivalents and $ 3.323 million for Facebook in the year ended 2013 and $ 0.841 million for Twitter in the same period are examples. The industry is also oligopolistic, a factor that concentrates proceeds among few players. Consequently, cash and cash equivalents have to be high per player, compared to values in competitive industries in which many players share the markets’ proceeds (Albarran, 2013).