I’ve oftened wondered what large corporations do with all of the money they make.
Like Wal-Mart, however many billions of dollars profit they make a year, after taxes and dividends and expenses, they must still have tens of billions left. What the hell do they do with it all? Bank? Safe? Do they burn it? Bury it? Bath in it?
They invest it. Electronically.
Where?
Every corporation has a certain amount held as “cash reserves”, which means non-cash reserves. (The money is actually held in electronic accounts.) The corporation’s expenses are taken from these cash reserves. The rest of it is invested. Large corporations need to be constantly expanding to satisfy their shareholders, so the investment money is used either to open up new locations, do research, or otherwise set the groundwork for more earnings in the future.
I helped developed an online product for a major bank that allows large companies to invest their left over cash at the end of the day in short term corporate paper. This was an investment of just a few hours as they would need the cash back the next day.
At any major large corporation you’ll have treasury management employees whose sole job it is to look at the cash available in the morning, what they’ll need through the day, and to make wise decisions about moving the rest around for fun an profit.
Coin jars. Really BIG coin jars.
They return it to the employees as salary, benefits, perks, stock options and bonuses.
Wait, he said Wal-Mart.
First, the “they” in corporations that are publicly held is the entire pool of shareholders. I know this is a nitpicky point but sometimes questions around corporations are colored as if there is some sneaky cabal gloating over profits…there is, of course, but the rest of us capitalists benefit also.
Anyway…money is managed on a daily basis so it’s not like my house where we tally up how we did over a whole year, once a year at tax time. Once any physical cash gets to the bank it’s all electronic. Electronic ‘cash’ as mentioned above is managed on a short term basis with various schemes to maximize any return on it.
Long-term profits such as I think you are referring to are reinvested in business opportunities to grow the business and expand the corporate empire. If the business opportunities don’t seem to justify that, the money can be distributed directly to the shareholders, or can be used to buy back stock from shareholders who want to sell it, increasing the value per share for remaining shareholders.
Profits can either be reinvested in the business or returned to shareholders or kept as a reserve to do either in the future. “Dividends” are simply the method that corporations use to send profits to their shareholders…every shareholder will get a check for the amount of $X per share. And the shareholders are anyone who owns stock in the company. If those people wish to cash those checks, pour the money into a swimming pool and roll around in it, they are free to do so.
The point is that there is no “leftover” money. Either the money goes to run and expand the business, or it goes to the shareholders.
Did it round up the pennies left over and put the difference into a personal checking account? 
I get where the profits go in publicly held companies but I wonder what happens with all the profits in private companies like Publix grocery stores.
I’m sure enough of it go to operating expenses and expansion but in a really good year does the family really make millions of dollars for themselves?
Of course, if they are the owners. It doesn’t make any real difference whether a corporation is public or private…ownership is ownership.
Not only would they personally be that much richer, but under our lovely system of taxing income and not wealth, they wouldn’t even pay taxes on their increased wealth until and unless they cashed it in. This lets those millions make more millions with pre-tax moolah. (Of course, the corp itself paid tax on the profits.)
They got this really amazing offer, from an ex-Treasury official in Nigeria…