$1 trillion in cash are to be spent by U.S. companies though not on expanding their business and recruiting new workers due to continuing uncertainty about the strength of economy, this was stated on Tuesday by Moody’s Investors Service.
Moody’s added to his statement that the stabilization of economy urges companies to spend upon share repurchases, mergers and acquisitions.
During recession companies cut down their costs and reduce investment in plants, equipment and downsized operations thus boosting the cash holdings. Companies were reopened by the corporate bond market, cash levels were boosted by selling debts and refinancing.
As of mid-year 2010, nonfinancial U.S. companies are sitting on $943 billion in cash and some short-term investments, in contrast to that numbers in 2008 which are $775 billion, Moody’s said. $121 billion left over all the capital spending and dividends.
Moody’s report clearly stated that they believe that companies are searching for a larger certainty and a signal towards a permanent increase in sales before they let go of the cash hoards, which was built with a lot of handwork by them.
It is unlikely for the overseas cash to be retained to the United States, which is approximately one-quarter of the total sum.
$346 billion of the balance sheets or 37 percent of the sum is held by 20 companies.
Cisco System hold the largest cash balance, at $39.86 billion followed by Microsoft, Google, Oracle and Ford Motors Co at $36.79 billion, $30.06 billion, $23.64 billion and $21.89 billion respectively, stated by Moody’s.
At $207 billion technology holds the most cash, pharmaceuticals with $ 124 billion at second place, energy at $ 105 billion at third and consumer products with $101 billion at fourth. Moody’s said.