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Corporates accumulating more cash than ever

Corporate decision-makers remain cautious and are continuing to hold on to cash reserves rather than investing or deploying cash, according to research done by Global Finance magazine, which published its list of the 25 global public companies holding the most in cash and cash equivalents: the Global Finance Cash 25

Companies are more likely to be keeping large reserves of cash due to an increase in geopolitical risks in recent years, as well as “memories of the recent recession”, according to the magazine. The list of corporates holding the greatest amounts of cash and cash equivalents is led by Microsoft, followed by Apple, Oracle, Cisco Systems and Toyota Motor. Some of the interesting points to come out of the research include the following:

  • the top 10 list is dominated by US companies – seven out of the top 10 are American;
  • companies in the top 25 all had cash holdings above $16.3 billion, which Global Finance says is “up significantly from 2016’s threshold of $13.5 billion or 2015’s $14 billion”;
  • Apple's cash holdings increased by a whopping $25.6 billion in the past year, taking it from fifth to second place in the ranking;
  • four out of the top five are US technology companies – the odd one out is Japanese firm Toyota Motor;
  • as well as Apple, several other companies have also made huge additions to their cash holdings: Honda’s cash reserves increased by $3.2 billion, while Samsung, Amazon and Abbott Laboratories also leapt several places up the rankings;

Global Finance's top 10 corporate cash hoarders

  1. Microsoft: $113.24 billion
  2. Apple: $67.16 billion
  3. Oracle: $66.08 billion
  4. Cisco Systems: $65.76 billion
  5. Toyota Motor: $48.68 billion
  6. General Electric: $48.13 billion
  7. Johnson & Johnson: $41.91 billion
  8. Samsung Electronics: $29.60 billion
  9. Total: $29.15 billion
  10. Amazon: $25.98 billion

This chimes with research by the Association of Financial Professionals (AFP) – whose quarterly Corporate Cash Indicators survey for July 2017 showed very much the same picture: corporates are apprehensive about the economic prospects and are therefore accumulating cash and short-term investments. Read more on that research here: AFP survey shows corporates still conservative on cash positions


CTMfile take: There's a lot to think about here: from the domination of US tech firms in the ranking, to the significant increase in cash holdings among multinationals generally – and not least the whopping increase in Apple's cash reserves begs the question: should we really be paying a grand for the new iPhone X?


This item appears in the following sections:
Cash & Liquidity Management
Global Cash Visibility
Liquidity Risk Management
Releasing Working Capital
Investing
Investing Short-Medium Term Surpluses
Money Market Fund Investing
Working Capital Management
Total Working Capital

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