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Increasing cash position and treasury stock

In the below balance sheet exhibits, you will notice that on an annual and quarterly basis, the cash position has increase over the prior period in almost every time period. This is a very positive sign as the company starts to stockpile cash, coming in around $3.25 cash per share outstanding, a nice margin of safety as the stock trades in $23 per share range. This cash balance helps to improve current ratio and quick ratio metrics, both above 2.5x. As I continue to monitor this stock, the firm should be careful with how much cash they decide to sit on. Sometimes a large cash balance is seen by shareholders as an inefficient use of capital. Currently NVDA does not pay a dividend, so one has to assume the growing cash balance will be used in one form or another (i.e. M&A activity, dividends, etc)

Similar to the cash balance, the treasury stock has increased in every period when compared to the previous one. With no debt to pay off, NVDA is basically reducing the outstanding equity. This is a favorable sign on multiple fronts. First, the firm believes that the stock is undervalued in the marketplace and utilizing its cash to buy shares back. Secondly, by reducing the # of common shares outstanding, the earnings per share metric will be naturally improved by reducing the denominator.

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