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AFP Press Release

AFP Releases Corporate Cash Indicators™ for 2Q13

Pace of corporate cash accumulation inches upward.


WASHINGTON – Business confidence appears to have softened as the pace of corporate cash accumulation inched up during the second quarter of 2013 and companies are indicating a greater likelihood to build cash during the third quarter, according to the July 2013 AFP Corporate Cash Indicators (AFP CCI).

The AFP CCI™ are calculated each quarter by the Association for Financial Professionals (AFP) and underwritten by State Street Global Advisors.

AFP Corporate Cash Indicators™ for 2Q2013
------------------------------------------

+12   Change in cash holdings: 2Q13 v. 1Q13

+11   Change in cash holdings:  2Q13 v. 2Q12

+14   Expected change in cash holdings during 3Q13  

Each of these indicators measure recent and anticipated changes in corporate cash balances by calculating increase percentage minus decrease percentage.
Each quarter, AFP asks select members representing a broad cross section of U.S. businesses the same questions: whether their company’s short-term holdings increased or decreased in the past year and past quarter; whether investment selections for those holdings changed; and whether they expect cash holdings to increase or decrease in the coming quarter. AFP member companies have agreed to participate in this ongoing study on a long-term basis.

Participants manage their companies’ cash and short-term investment portfolios and are fully aware of their companies' liquidity needs and business strategies. Since corporate decisions to grow/shrink the size of cash and short-term investment portfolios reflect their business outlook and direction, changes reported by this broad group of companies are indicators of economic activity.

Second quarter 2013 indicators show that 38 percent of organizations held larger cash and short-term investment balances at the end of the June quarter than they did at the end of March, while 26 percent had shed cash in the second quarter.

Year-over-year, 34 percent of organizations had greater cash and short-term investment balances at the end of June 2013 than they had in June 2012, while 23 percent held smaller cash balances relative to a year ago.

The forward-looking indicator measuring expectations for increasing cash during the third quarter of 2013 swung from a reading of -5 for Q2 to +14, signaling a cautious shift in strategy at some organizations.

 “Since this time last year, cash reserves have been fairly stable,” said Jim Kaitz, AFP’s president and CEO.  “Where we are really seeing a jump is in expectations for the coming quarter. There is an expectation that the Fed will slow its rate of stimulus.  Long-term interest rates have jumped.  With an economic recovery that is bumpy, finance executives are wary once again.”

Meanwhile, the indicator for short-term investment aggressiveness shed 3 points to a reading of +1, as companies were slightly more aggressive in how they managed their cash, but less so than in the prior quarter.

AFP began collecting quarterly data in January 2011 and has now collected 11 data sets. See www.afponline.org/CCI.  The next set is slated to be published October 28, 2013.

AFP Corporate Cash Indicatorsis a trademark of the Association for Financial Professionals. All AFP Corporate Cash Indicatorssurvey questions and reports are the copyrights of the Association for Financial Professionals, and all rights are reserved.

 

ABOUT AFP® (www.afponline.org)

The Association for Financial Professionals (AFP) is the professional society that represents more than 16,000 treasury and finance executives. Headquartered outside Washington, DC, AFP provides members with news, economic research and data, financial 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.

 

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