Moody's: US corporate cash grows despite lower borrowing

The US-based ratings agency, Moody’s Investors Service, is out with a new report on the US corporate cash flows, highlighting that the technology sector again held the most cash among US non-financial corporate sectors in 2016.

Key Points:

The top five most cash-rich companies were all technology firms, with Apple Inc. continuing to lead, followed by Microsoft Corp., Google Inc., Cisco Systems Inc. and Oracle Corp. Together these firms held $594 billion in cash, or 32% of total US non-financial corporate cash, at the end of the year.

Richard Lane, Moody's Senior Vice President, noted: “The concentration of cash among the most cash-rich US companies continued to grow last year, as did the proportion held by the technology sector, which accounted for close to half of the total. Despite strong returns of capital to shareholders, we expect, absent tax reform, the technology sector's cash concentration to grind even higher over the next year because of its strong cash flow generation.”

The technology sector generated 48% of total rated non-financial free cash flow in 2016, down from 63% in 2015 but equal to its average for the past 10 years. In terms of cash holdings, technology is followed by the healthcare/pharmaceuticals, consumer products, energy, automotive and manufacturing sectors.