Press Releases

Study: A Troubled and Volatile Global Economy Drives U.S. Firms’ to Accumulate Cash Rapidly In 4Q15

AFP January 2016 Corporate Cash Indicators® finds that companies built cash holdings at a far more rapid pace during the last quarter of 2015 than in the prior quarter.

Bethesda, Md. -- American companies hoarded cash at a far more rapid pace during the last quarter of 2015 than in the prior quarter, according to the AFP Corporate Cash Indicators® (AFP CCI). See for results and answers to frequently asked questions.

January 2016 AFP Corporate Cash Indicators®
Change in cash and short-term investment holdings (over past quarter): 4Q15 v. 4Q14 = +16
Change in short-term holdings in the past year-: 4Q15 v. 4Q14 = +15
Expected change in cash holdings during 1Q16 = -1
Aggressiveness of short-term investments = -3

The indicators measure recent and anticipated changes in corporate cash balances by calculating increase percentage minus decrease percentage.

Though domestic indicators have been encouraging, with a continued uptick in employment numbers, a long-awaited interest rate increase by the Federal Reserve Bank and precipitously low energy prices, organizations continue to be reluctant to loosen their purse strings. The severe headwinds being faced by the global economy, which include the recent downward spiral in most equity markets, continued volatility in currency and commodity markets and other geopolitical risks, are likely restraining organizations from taking any firm action to increase spending and take a more aggressive approach with investments.

The forward-looking CCI measure, tracking expectations in the change of cash holdings during the current quarter, came in at -1, a decrease of 9 points from October’s CCI report, and up 13 points from a year earlier. This is the first quarter since April 2015 that organizations said they plan to decrease, rather than accumulate, cash reserves.

It should also be noted that in this quarter, organizations’ behavior is better aligned with their expectations entering the quarter than in previous ones. Organizations indicated that they planned to accumulate cash during the last quarter in 2015, and they have done so. This signals that organizations are taking a very cautious approach with their cash and investments.

“The January 2016 AFP CCI illustrates just how careful treasury and finance professionals are with their organizations’ cash,” said Jim Kaitz, president and chief executive officer of AFP. “But treasury and finance professionals would be wise to look for select opportunities to deploy the cash, rather than reflexively hoard it.”

AFP began collecting quarterly data in January 2011 and has now collected 21 data sets. The next set is slated to be published April 25, 2016. The AFP CCI measures 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.

Each quarter, AFP asks select finance professionals 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.

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.


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 world.

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