Global Companies Increasing Cash Assets Amid COVID-19... "2.4 Times Monthly Sales"

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Concerned about the economic impact of the novel coronavirus disease (COVID-19), companies worldwide are increasing their cash equivalents on hand, reported the Nihon Keizai Shimbun on the 11th.

According to the report, financial information provider 'QUICK FactSet' compiled cash equivalents of over 5,500 listed companies worldwide that announced their first-quarter (January to March) financial results this year. As of the end of March, the total cash equivalents amounted to $3.7 trillion (approximately 4,500 trillion KRW), a 15% increase compared to a year earlier.

Cash equivalents refer to cash, deposits, and short-term marketable securities held by companies. As of the end of March, the scale of cash equivalents was 2.4 times the average monthly sales total from January to March, marking an all-time high relative to monthly sales, according to Nihon Keizai Shimbun.

During this period, U.S. Coca-Cola raised $8 billion, increasing its cash holdings to $17.6 billion. Coca-Cola plans to temporarily suspend capital expenditures, excluding ongoing projects, and maintain a high level of cash liquidity.

By industry, cash equivalents relative to monthly sales were 2.6 times for automobiles and 2.9 times for machinery, while the aviation and transportation sector recorded 2.2 times. Major companies found it easier to raise funds as central banks worldwide implemented easing policies, including expanding corporate bond purchase limits.

Last month, aircraft manufacturer Boeing issued $25 billion in corporate bonds, and Delta Air Lines issued $3.5 billion. The total corporate bond issuance by U.S. companies last month reached $229.4 billion, a monthly record high. Nihon Keizai Shimbun stated, "Even if central banks supply funds to companies, demand will not recover unless employment stabilizes," adding, "There is also a view that normalizing factory operating rates due to economic recovery will take about three years."

This content was produced with the assistance of AI translation services.