Corporate Treasurers Moderate Cash Hoarding in 2Q, Trend to Continue

AFP Corporate Cash Indicators™ show year-over-year increase at 40% of reporting companies

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Association for Financial Professionals

Jul 23, 2012, 08:00 ET

WASHINGTON, July 23, 2012 /PRNewswire/ -- Companies increased their cash and short-term investment balances in the second quarter, according to the AFP Corporate Cash Indicators™ (AFP CCI), a quarterly study that measures recent and anticipated changes in U.S. corporate cash balances. Quarter-to-quarter, 38 percent of reporting organizations had greater cash balances at the end of 2Q12 than they had at the end of 1Q12, compared to 29 percent that shed cash during the period.

The difference, a net index reading of +10, was down 3 points from the March 2012 survey and off 14 points from six months earlier.

Year-over-year, cash hoarding increased, with 40 percent of companies reporting larger balances at the end of 2Q12 than they had at the end of the 2Q11, with a resulting net index reading of +15, up two points from the April 2012 survey.

Over the next three months, treasurers expect the growth in corporate cash balances to continue to slow, with only 31 percent of organizations anticipating a build-up of cash reserves and 27 percent expecting to reduce balances. The net index reading of +4 is down 4 points from the April 2012 survey and 13 points from a year earlier.

AFP Corporate Cash Indicators™

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+10 = 2Q12 v. 1Q11

+15 = 2Q12 v. 2Q11

+04 = Expectations for 2Q12

Represents "increase" percentage minus "decrease" percentage.

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. The historic data series is available for download at www.AFPonline.org/CCI

AFP began collecting quarterly data in January 2011 and has now collected six data sets. The next set will be published in the October 15, 2012 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 more information and to learn about publishing the CCI on your site, see www.afponline.org/CCI or contact [email protected].

ABOUT AFP®
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