However, analysts at Moody’s have noticed, “the rising cash piles mask a rapid increase in debt”.
According to Moody’s Analytics, about 30 percent (some $504 billion) of the $1.7 trillion in cash held in 2015 by all American companies is in the hands of five tech companies: Apple, Microsoft, Alphabet, Cisco and Oracle.
Some of the biggest USA companies have accumulated cash piles worth nearly $1.7tn (£1.1tn) – more than two thirds of it overseas. For investors, that huge cash pile is a cushion against a business downturn: if Apple, for example, stops selling enough iPhones to push its stock price higher, investors will just demand payoffs out of the cash pile to make up for it. For the general public in America, these cash piles sitting overseas represent an enormous loss of potential tax revenue that could be used to, you know, make all of our lives better somehow.
“While the concentration of cash among the top-rated cash holders continues to grow, so too has the portion held by the technology sector, which accounted for a record 46 percent of total cash in 2015, up from 41 percent in 2014”, Lane said.
The figures will add to the controversy about companies sitting on cash as the data shows they are parking it offshore to avoid the tax bill that would be due on returning it to the US. In 2015, the amount of cash that was held by the U.
“This amount reflects the negative tax consequences of permanently repatriating money to the United States and the use of domestic cash for dividends, share buybacks and the majority of acquisitions”, Moody’s said. Apple is followed by Microsoft (MSFT) with $103 billion, Google (GOOG), with $73 billion, Cisco Systems (CSCO) with $60 billion and Oracle (ORCL) with $52 billion.
The technology industry has put billions of dollars into acquisitions, dividends and share buybacks during recent years, but surging cash flows for companies such as Apple are restocking bank accounts faster.
Don’t expect that cash to come home anytime soon, Moody’s says.
Allowing companies to repatriate their foreign holdings of cash without getting taxed twice, once in another country and again in the US, is part of the debate over reforming the tax code. Apple, which has been the “cash king” since 2009, held $215.7 billion in total cash for the period.
