Cash Balances Increase

The cash held by U.S. corporations has increased to record $1.79 trillion. Even with the increase, companies have been using cash to pay back shareholders. Companies paid a fourth-quarter dividend record of $79.83 billion and repurchased $99.15 billion in stock. One interesting fact is that even though U.S. corporate cash holdings are at a record, it only represents 11 percent of GDP, up from 10 percent of GDP in 2000. In contrast, European companies cash holdings typically represent to 14 to 20 percent of the corporation's home country GDP. Overall, 44 percent of finance executives expect cash balances to increase even further in the next six months.