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AFP survey shows corporates still conservative on cash positions

Corporate financial professionals are apprehensive about the economic prospects and are therefore accumulating cash and short-term investments. These findings come from a survey of corporate treasurers and financial professionals, conducted by the Association for Financial Professionals (AFP). The US association publishes a quarterly Corporate Cash Indicators survey, which gives a regular assessment of corporate cash positions and levels and is considered as an indicator of business and financial sentiment in the US.

The findings for Q2 2017 were similar to the findings over the past year and suggests that corporates are increasingly choosing to maintain solid cash positions, rather than investing cash in expansion projects, for example. According to the AFP's analysis, corporates will continue to accumulate cash throughout Summer 2017, due to “prevailing uncertainty in the global and domestic economy”. The AFP's report stated: “Severe gridlock in Washington and the inability of the administration to make progress with its pro‐growth agenda have also contributed to treasury and finance professionals continued hesitancy to deploy cash.”

The Q2 survey results show that:

  • 41 per cent of companies held larger cash and short-term investment balances at the end of Q2 2017 than they did at the end of Q1 2017;
  • 25 per cent reduced cash holdings in Q2;
  • 32 per cent expect to expand cash and short-term investment balances over the next quarter;
  • 24 per cent plan to reduce these balances.

The AFP's graph, shown below, represents the changing corporate cash expectations over recent years:


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Investing Short-Medium Term Surpluses

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