Five Tech Firms Hold More Than A Third Of Cash In Corporate America
22 May 2016, 10:31 pm EDT By Katherine Derla Tech Times
More than a third of cash in Corporate America is in the hands of five tech companies — that's $1.68 trillion in cash or marketable securities. In the cash race, Apple, Alphabet, Cisco Systems, Oracle and Microsoft are leading.
( Jason Dirks | Flickr )
Five tech companies make up 30 percent of Corporate America's $1.68 trillion in cash or marketable securities. When combined, they have a total of $504 billion in cash, a new report has found.
According to Moody's Investors Service, a credit ratings agency, Apple, Alphabet, Cisco Systems, Oracle and Microsoft hold more than a third of cash in Corporate America. In 2014, these companies accounted for 27 percent in the cash stash, jumping from 25 percent in 2013.
"We expect the concentration of cash in the technology sector to grind higher over the next year because the sector generates over half of the total free cash flow among rated non-financial companies," said Richard Lane, an analyst at Moody's.
The report also found that the tech industry has created an even wider lead. Its combined war chest makes up 46 percent of the entire non-bank private sector in the United States, which increased from 40 percent toward the end of 2014.
"We expect that overseas cash balances will continue to grow unless tax laws are changed to encourage companies to repatriate money," the report said. "There has been little progress toward corporate tax reform that would incentivize U.S. companies to permanently repatriate funds held overseas."
In the previous years, the tech companies invested billions into disbursements and acquisitions. They also spent billions on stock buybacks, but the massive cash flows quickly replenished their accounts.
In particular, Apple alone, which has maintained its top ranking in Moody's reports since 2009, gained $176 billion in cash.
Apple's big chunk accounted for more than 25 percent of corporate cash balances' biggest leap in the past six years. In fact, the tech industry is responsible for 66 percent of the surge.
Moody's report looked into 1,000 companies in Corporate America, and those in the top 50 include McDonald's, Visa, Ford, eBay and WalMart.
The analysis found an overall revenue decline in 2015 at 4.1 percent ($10.8 trillion), plus a decline of 0.2 percent ($1.5 trillion) in cash flow from operations.
Below are the offshore cash rates of the five tech firms in 2014 and 2015, respectively:
• Apple, 88 percent, 93 percent
• Microsoft, 91 percent, 94 percent
• Cisco, 94 percent, 94 percent
• Alphabet, 60 percent, 59 percent
• Oracle, 90 percent, 87 percent
Photo: Jason Dirks | Flickr
( Jason Dirks | Flickr )
Five tech companies make up 30 percent of Corporate America's $1.68 trillion in cash or marketable securities. When combined, they have a total of $504 billion in cash, a new report has found.
According to Moody's Investors Service, a credit ratings agency, Apple, Alphabet, Cisco Systems, Oracle and Microsoft hold more than a third of cash in Corporate America. In 2014, these companies accounted for 27 percent in the cash stash, jumping from 25 percent in 2013.
"We expect the concentration of cash in the technology sector to grind higher over the next year because the sector generates over half of the total free cash flow among rated non-financial companies," said Richard Lane, an analyst at Moody's.
The report also found that the tech industry has created an even wider lead. Its combined war chest makes up 46 percent of the entire non-bank private sector in the United States, which increased from 40 percent toward the end of 2014.
"We expect that overseas cash balances will continue to grow unless tax laws are changed to encourage companies to repatriate money," the report said. "There has been little progress toward corporate tax reform that would incentivize U.S. companies to permanently repatriate funds held overseas."
In the previous years, the tech companies invested billions into disbursements and acquisitions. They also spent billions on stock buybacks, but the massive cash flows quickly replenished their accounts.
In particular, Apple alone, which has maintained its top ranking in Moody's reports since 2009, gained $176 billion in cash.
Apple's big chunk accounted for more than 25 percent of corporate cash balances' biggest leap in the past six years. In fact, the tech industry is responsible for 66 percent of the surge.
Moody's report looked into 1,000 companies in Corporate America, and those in the top 50 include McDonald's, Visa, Ford, eBay and WalMart.
The analysis found an overall revenue decline in 2015 at 4.1 percent ($10.8 trillion), plus a decline of 0.2 percent ($1.5 trillion) in cash flow from operations.
Below are the offshore cash rates of the five tech firms in 2014 and 2015, respectively:
• Apple, 88 percent, 93 percent
• Microsoft, 91 percent, 94 percent
• Cisco, 94 percent, 94 percent
• Alphabet, 60 percent, 59 percent
• Oracle, 90 percent, 87 percent
Photo: Jason Dirks | Flickr
