Cash in Hand;
How Companies Make it Work
The E-6 unemployment rate has remained high in the U.S. as companies hold onto cash, concerned about the potential for steep fines from the EPA and other governmental organizations. Some companies though, are in the enviable position to have cash on hand that isn't allocated to paying fines. Often these companies find creative uses for that cash that benefits their shareholders in multiple ways.
Corporate tax rates in the U.S. can also account for the stockpiling cash outside the country. For U.S. multinational companies, keeping earnings on the balance sheets of foreign subsidiaries just makes good business sense.
According to one study, out of the W.P. Carey School of Business at Arizona State University, as of the end of 2013, "U.S. public firms held over 25 percent of the book value of their total assets in cash and liquid securities."
Non-financial U.S. corporations were holding $4 trillion in cash and marketable securities by the end of 2013. That is approximately twice as much
cash as was held before the recession. America's top five corporations have cash reserves that exceed the reserves of most Asian countries.
Growth Through Purchase
Corporations have also found value in acquiring other firms that may strengthen their own brand and have not held back in buying those firms. We have seen several examples of this over the past year. Microsoft has acquired the technology firm N-trig and has already purchased Aorato, a cyber security firm and Equivio, a text analytics firm. These purchases are believed to benefit Microsoft in preparation for its next operating system.
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