US firms build up record cash piles

APPLE led US corporations that amassed a record $1.24 trillion (R9.3 trillion) of cash last year as memories of the 2008 credit crisis linger, according to Moody’s Investors Service. Apple is the most valuable business globally.

Excluding Apple, with $97.6 billion of cash and no outstanding debt, the figure was relatively unchanged at $1.15 trillion, even as revenue and cash flow from operations hit a record, Moody’s analysts led by Richard Lane said. Investment-grade companies graded A3 or higher by Moody’s hold $594.3bn, or 54 percent of the total, Moody’s said in the report which tracked cash and liquid investments for non-financials.

“Treasurers have distinct memories of capital markets closing very quickly, and I think companies in general are more focused on controlling their fate from a funding standpoint and part of that means being able to internally fund your investment needs,” Lane said. Still, “there’s a large and growing use of the cash that these companies generated over the last handful of years”.

The biggest US non-financial corporations maintained fortress balance sheets last year as the US economic recovery wavered and European policymakers struggled to contain the sovereign-debt crisis. Companies increased capital expenditures and dividend payments even after posting record revenue of $10.4 trillion. – Bloomberg