CFO reports U.S. finance executives forecast that their organizations’ cash balances will fall this quarter, the Association for Financial Professionals reports reversing a two-year trend.
For only the second time in more than two years, the corporate-cash indicator from the Association for Financial Professionals shows more finance executives (28%) anticipate cutting their cash hoard in the first quarter than are planning to add to it (23%). It’s the first time finance professionals are forecasting lower cash reserves for a quarter since January 2011, when the AFP began conducting the study. If the forecast is correct, it would suggest companies are becoming less wary of parting with their cash.
A forecast, of course, is just a forecast. Quarter-over-quarter and yearly, corporate-cash balances are still climbing. Forty-seven percent of organizations answering the survey said they had larger year-end cash balances in 2012 (versus 27% with smaller balances) than in 2011. And from the third quarter of 2012 to the fourth quarter, 37% of respondents increased balance-sheet cash, compared with 32% that depleted their reserves.
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