AFP Corporate Cash Indicators™ Show Corporate Cash Hoarding Picks Up in 3Q12

Build out of cash reserves expected to slow slightly in coming quarter

News provided by

Association for Financial Professionals

Oct 14, 2012, 12:00 ET

MIAMI, Oct. 14, 2012 /PRNewswire/ -- U.S. corporate treasurers, like the rest of the world, are in a wait-and-see mode and are not yet deploying their cash reserves. In fact, they are continuing to build cash reserves for their organizations, according to the AFP Corporate Cash Indicators^™ (AFP CCI), a quarterly study that measures recent and anticipated changes in U.S. corporate cash balances. In this environment, companies continued to build cash and short-term investment balances during the third quarter of 2012.

Quarter-to-quarter, 40 percent of reporting organizations had greater cash balances at the end of 3Q12 than they had at the end of 2Q12. Meanwhile, 26 percent had cut cash reserves.

The study, underwritten by State Street Global Advisors, was released today at the AFP Annual Conference in Miami.

Companies reported that their investment selection for cash and short-term investments had become neither more nor less aggressive.

Year-over-year, cash hoarding increased, with 40 percent holding greater balances at the end of 3Q12 than they had at the end of the 3Q11.

Looking forward, the build out of cash balances will slow slightly from current levels—33 percent of organizations expect to build cash and short-term investment balances over the next three months, while 21 percent plan to reduce these balances.

"This sidelined cash is withholding the fuel for economic growth," said Jim Kaitz, AFP's president and CEO. "This is the money that companies would use for new projects, expansion, R&D, and, ultimately, job creation. Only when uncertainty dissipates, confidence in the economy improves, and companies release their cash will the job picture significantly improve."

AFP Corporate Cash Indicators™
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+14 3Q12 v. 2Q12

+16 3Q12 v. 3Q11

+12 4Q12 expectations

Represents "increase" percentage minus "decrease" percentage. See www.afponline.org/CCI

The AFP CCI™ provides treasury and finance professionals, policymakers and market analysts with timely data on a determinant of economic activity: corporate cash. The AFP CCI™ is created and maintained by the Association for Financial Professionals (AFP), a professional society that serves corporate finance departments globally.

Methodology: On the opening days of each quarter, AFP asks select members whether their short-term holdings increased or decreased in the past year and past quarter; whether investment selections for those holdings changed in the last quarter; and whether they expect cash holdings to increase or decrease in the coming quarter. For consistency, AFP asks the same questions each quarter. AFP members have agreed to participate in this ongoing study on a long-term basis.

AFP began collecting quarterly data in January 2011 and has now collected eight data sets. For more information. See www.afponline.org/CCI. The next set will be published in the January 28, 2013 issue of AFP EconWatch newsletter (www.AFPonline.org/econwatch).

AFP Corporate Cash Indicators^™is a trademark of the Association for Financial Professionals. All AFP Corporate Cash Indicators^™survey questions and reports are the copyrights of the Association for Financial Professionals, and all rights are reserved. For information about publishing the CCI on your site, see www.afponline.org/CCI or contact [email protected].

ABOUT AFP® (www.afponline.org)
The Association for Financial Professionals (AFP) is the daily resource for a network of more than 16,000 treasury and finance professionals. Headquartered outside Washington, DC, AFP provides members with news, economic research and data, treasury certification programs, networking events, financial analytical tools, training, and public policy representation to legislators and regulators. AFP's global reach extends to over 150,000 treasury and financial professionals worldwide, including AFP of Canada; London-based gtnews, an on-line resource for the treasury and finance community; and bobsguide, a financial IT solutions network.

SOURCE Association for Financial Professionals