Arkansas' Public Companies Stashing Cash

by Mark Friedman  on Monday, Aug. 23, 2010 12:00 am  

Click here to view Arkansas' Public Companies' Cash Holdings

In Arkansas and around the country, some publicly traded companies have been squirreling away cash, which is good for their books but might not be for the economy.

"What will help spur recovery is [when] corporations begin to hire again, begin to expand their production, begin to invest in new projects," said Lee Pinkowitz, an associate professor at the McDonough School of Business at Georgetown University. "The longer they sit on [the cash], it might be beneficial for that particular company, but in aggregate, it could actually delay sort of an economic recovery."

Companies in the S&P 500, not including financial, transportation or utility firms, had $837 billion in cash and cash equivalents as of March 31, which was up 36 percent from March 31, 2008, according to a June 24 news release by Howard Silverblatt, senior index analyst at Standard & Poor's Indices.

"We've had six consecutive quarters ... that [companies] have increased and set a new record of the amount of cash they have had on their books," Silverblatt said.

The consecutive streak of piling cash might end at the second quarter, he said. With numbers in for 75 percent of the S&P companies, their cash is down 1.1 percent from the previous quarter, Silverblatt said.

Still, the companies have an average of 68 weeks of net operating income in the bank, "which gives them the ability to do anything they want basically," he said.

In Arkansas, the picture was slightly different. Of 13 non-financial publicly traded companies, seven had more cash on their books this year than they did in 2008.

Dillard's Inc. of Little Rock's cash pile increased 263.3 percent to $305.3 million between May 2008 and May of this year. Cash at P.A.M. Transportation Services of Tontitown jumped to $13.7 million on June 30 - nearly 24 times the amount it had in June 2008.

And Tyson Foods' cash holdings rose from $55 million on June 28, 2008, to $834 million on July 3.

"They're not spending it on capital expenditures," Silverblatt said.

Some companies are holding cash as a precaution, Pinkowitz said.



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