AFP Corporate Cash Indicators®

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July 2020 Results:

U.S. businesses continued to accumulate cash and short-term investment holdings during the second quarter of 2020 but did so at a slightly slower pace than the previous quarter. The quarter-over-quarter index decreased four points to +20. While the year-over-year indicator decreased by three points to +29, organizations continued to accumulate cash in the last year at the fourth-highest pace since AFP began collecting this data in 2011. The forward-looking indicator increased 7 points from last quarter’s reading of -15 to -8. Similar to last quarter, financial professionals are predicting they will be drawing down on their cash holdings due to worsening business performance.

 

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AFP Corporate Cash IndicatorsJuly 20April 20Jan 20Oct 19
Change in Cash Holdings (Over the Past Quarter)+20+24+31+9
Change in Cash Holdings (Over the Past Year)+29+32+33+20
Expected Change in Cash Holdings (During Current Quarter)-8-15-3+16

 

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How to read the results:

The indicators measure recent and anticipated changes in corporate cash balances by calculating the percentage of survey respondents reporting an increase (or expected increase) in cash holdings minus the percentage reporting a decline (or expected decline). Declining indicators are indicative of increasingly confident businesses. Conversely, rising indicators suggest growing pessimism.  

Why you should care about corporate cash holdings and the AFP Corporate Cash Indicators?

The reason is simple: all other things held constant, optimistic companies are more likely to deploy their cash holdings. Confident companies use their cash to make growth-orientated expenditures (e.g., increased capital expenditures, merger & acquisitions and hiring) and to increase dividend payouts and share repurchases. Conversely, pessimistic executives are likely to retain their cash holdings. 

The AFP Corporate Cash Indicators (AFP CCI), provide treasury and finance professionals, policymakers and market analysts with timely data on a determinant of economic activity: corporate cash levels. 

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Contact pr@afponline.org or call 301.907.2862 for more in-depth information, to read the full report or to arrange an interview with the AFP Research team.

About the AFP Corporate Cash Indicators

AFP Corporate Cash Indicators is a trademark of the Association for Financial Professionals. All AFP Corporate Cash Indicators® survey questions, data and reports are the copyrights of the Association for Financial Professionals, and all rights are reserved. For information about including the AFP CCI on your site, please contact pr@afponline.org.