WASHINGTON –October 28, 2013– Political
uncertainty and spotty economic growth eroded business confidence in the third
quarter of 2013 as companies increased the pace of cash accumulation, according
to the October 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. The CCI measure
changes in corporate cash holdings quarter-to-quarter and year over year, as
well as the expected change in short-term investment and cash accumulation in
the coming quarter.
Quarter-to-quarter, the indicator
increased to +19, its highest reading since January 2012, as companies accumulated
Year-over-year, the indicator jumped 10
points to +21, showing a large expansion in cash holdings over the year-ago period.
Looking ahead, the indicator for
expected cash holdings in 4Q13 dropped to +6 from +14 reported in the previous
report, meaning that companies expect to slow their pace of cash accumulation
in the final three months of 2013 in anticipation of a resolution to the
stalemate in Washington.
Meanwhile, the indicator for short-term
investment aggressiveness increased by a point to a reading of +2, indicating
that companies were marginally more aggressive in the way they managed their
October 2013 AFP
Corporate Cash Indicators™
Change in cash
holdings: 3Q13 v. 2Q13 = +19
Change in cash
holdings: 3Q13 v. 3Q12 = +21
in cash holdings during 4Q13 = +6
of short-term investments = +2
The indicators measure recent and
anticipated changes in corporate cash balances by calculating increase
percentage minus decrease percentage.
“This is a case of lost opportunity,”
said Jim Kaitz, AFP’s president and CEO. “While many companies expect to slow their
pace of cash accumulation in the fourth quarter, they would have been putting
that cash to work much earlier if not for the continued uncertain environment.”
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.
AFP began collecting quarterly data in
January 2011 and has now collected 12 data sets. See www.afponline.org/CCI for answers to
frequently asked questions. The next set
is slated to be published January 27, 2014.
ABOUT AFP ®
Headquartered outside Washington, D.C., the Association for Financial
Professionals (AFP) is the professional society that represents finance
executives globally. AFP established and administers the Certified Treasury
Professional and Certified Corporate FP&A Professional credentials, which
set standards of excellence in finance. The quarterly AFP Corporate Cash
Indicators serve as a bellwether of economic growth. The AFP Annual Conference
is the largest networking event for corporate finance professionals in the
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