Companies still haven’t forgotten about the credit crunch that occurred during the financial crisis. At the time, even the healthiest companies had a tough time meeting their short-term financial obligations.
As such, companies have spent much of the economic recovery building up their balance sheets with mountains of cash. Check out this table from U.S. Trust showing Apple’s corporate cash hoard against the cash balances of various countries.
“Amid a world of uncertainty, one thing is without question: Most U.S. corporations have plenty of capital at their disposal,” said U.S. Trust’s Joseph Quinlan. “Indeed, capital is in abundance among America’s largest nonfinancial companies, with Moody’s noting that U.S. firms were sitting on some $US1.6 trillion in cash at the end of 2013, a 12% increase from a year ago. The latest figure is nearly double the level of 2008, signaling the extent by which U.S. firms have built out their cash positions over the post-crisis period.”
Indeed, the cash piles of some of the biggest corporations rival those of some of the major economies around the world.
“Putting that number into perspective, the cash hoard of corporate America (e.g., financials) is greater than the total international reserves of Japan, the second-wealthiest nation in the world, with foreign exchange reserves of $US1.2 trillion,” said Quinlan. “Only China has more cash in the safe — almost $US4 trillion.”
“As Moody details, the combined cash of Apple, Microsoft, Google, Verizon Communications and Pfizer climbed to $US404 billion at the end of last year,” he continued. “That figure is up over 16.4% from the prior year and is in excess of some of Asia’s most cash-laden nations including South Korea, with foreign exchange reserves of $US336 billion, Hong Kong ($311 billion), Singapore ($270 billion) and India ($268 billion). America’s top five holders of cash not only have more in the bank than most Asian states, but their savings are also in excess of the entire Eurozone’s ($221 billion).”
Those are some mind-boggling comparisons.