U.S. Treasurers Marginally More Aggressive in Spending Corporate Cash

U.S. business confidence remained even in the final quarter of 2013, with organisations holding steady amounts of cash and investing those balances slightly more aggressively, according to the January 2014 AFP Corporate Cash Indicators (AFP CCI).


The AFP CCI are calculated each quarter by the Association for Financial Professionals (AFP).  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.


The quarter-to-quarter indicator remained steady at +19 as 44 percent of responding organisations reported larger short-term holdings at the end of the fourth quarter compared to 21 percent that reported smaller short-term holdings.


The year-over-year indicator shed one point for a reading of +20 as 48 percent of responding organisations expanded cash balances from 4Q12 to 4Q13, compared to 25 percent that shrunk balances over the period.  The indicator reading is off a point from the previous quarter but matches the fourth quarter 2012 reading.


Looking ahead, the January forward indicator is down seven points from October for a reading of -1, as 28 percent of organisations expect to increase short-term holdings vs. 29 percent that expect to reduce short-term holdings.  This is three points up from the January 2012 survey.


Meanwhile, the indicator for short-term investment aggressiveness increased by five points to a reading of +7, up seven points from a year ago.


“Treasurers are seeing some opportunities for investment,” says Jim Kaitz, AFP’s president and CEO. “As expectations rise for higher interest rates, they are becoming marginally more aggressive in the ways they invest their corporate cash.”


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