US Corporate Liquidity Falls US$250bn, First Decline in a Decade

After nearly a decade of strong year-over-year growth, cash and short-term investments of non-financial US companies fell by US$250bn (5%) in the second half of 2007 according to a survey of clients conducted by Treasury Strategies. Corporate liquidity rose steadily from US$3.9 trillion in 1999 to US$5.5 trillion by the end of June 2007. At year-end 2007, it was US$250bn lower at $5.25 trillion. It is unclear how this drop in corporate liquidity will impact the US economy. However, the study showed that companies are taking a much more disciplined posture in their cash management. “We also see a trend among corporate treasurers to invest more in the technology and infrastructure supporting their cash management activities,” David C. Robertson, partner with Treasury Strategies, commented. According to Anthony J. Carfang, another Treasury Strategies partner, “As a result of the recent market turmoil, corporate treasurers are taking a hard look at what securities are in their portfolios as well as their investment policies and practices. Many are no longer managing their short-term portfolios themselves. Rather, they are utilising a mix of bank products and money funds.”


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