WASHINGTON – October 24, 2011 – Companies increased their cash and short-term investment balances in the third 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, 42 percent of reporting organizations had greater cash balances at the end of 3Q11 than they had at the end of 2Q11.
Meanwhile, companies reported that their investment selection for cash and short-term investments had become more conservative.
Year-over-year, cash hoarding had slowed a bit, with 41 percent holding larger balances at the end of 3Q11 than they had at the end of the 3Q10.
Looking ahead, 33 percent expect to further build cash and short-term investment balances during 4Q11 compared to 22 percent that expect to reduce balances.
AFP Corporate Cash Indicators™
+203Q11 v. 2Q11
+183Q11 v. 3Q10
“Increase” percentage minus “decrease” percentage
“Finance professionals in this environment are being asked to focus on conservative investments for corporate funding,” said Jim Kaitz, AFP’s president and CEO. “Further, companies were more likely to add to cash during the third quarter than they had during the first two quarters of 2011, but the pace of cash accumulation appears to be slowing when compared to the third quarter of 2010.”
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 four data sets. The next set will be published in the January 23, 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 information about publishing the CCI on your site, see www.afponline.org/CCI or contact firstname.lastname@example.org.
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