As the COVID-19 pandemic continues and the various issues associated with the Delta variant rage on, some of the biggest companies in the world are seemingly aligned with one strategic move. 

They are hoarding cash at a staggering rate. In fact, added together, the six largest non financial companies reported $6.85 trillion is sitting on their balance sheets. 

Why? It seems obvious that these huge corporations are skittish about how much longer the pandemic will continue, how bad the rising inflation will become, and just where the economy is heading. 

 Gareth Williams, a global head of corporate research for S&P Global Ratings was quoted in a CNN story saying he thinks the amount of cash being stored by companies could hit $7.1 trillion by the end of the year. 

Here’s some examples of how much cash well known companies are hanging on to.  Berkshire Hathaway is saving for one epic rainy day, s they reported $144.1 billion on their balance sheet. 

Tech behemoths have even more. Apple, Microsoft and Alphabet are sitting on $460 billion.  Amazon has a rainy day fund of $90 billion, and Facebook has a mountain of cash too, currently $64 billion. 

Typically, big companies will use cash reserves to invest on R&D and other future initiatives, but because funding is so cheap, the companies are holding on to their cash, and spending on dividends and mergers according to experts. 

Richard Lane is Sr. VP at Moody’s, and he told CNN that he thinks companies will soon get away from their current strategy of hanging on to huge amounts of cash. 

“What happened during the pandemic is that large investment-grade companies were aggressive in refinancing debt or raising new money. As we go through this year, I would expect that cash levels will come down a little bit.”

Add comment