(CFO, 1 May 2012) In Brief: Hoarding corporate cash has been a common response to the financial crisis, but recently US companies have started increasing capital expenditures at the same time they add to their coffers. One analyst describes the trend as “the first truly healthy sign since before the recession.” Our View: While this [...]
Read more(Business Finance, 26 April 2012) In Brief: Forty percent of corporations increased their cash balances in Q1-2012, while 27% reduced them, according to a new study. While this ratio has narrowed, the growth in excess corporate cash “shows no signs of letting up,” this writer says. One consultant cited in this article attributes rising cash [...]
Read more(Wall Street Journal, 11 April 2012) In Brief: Aluminum producer Alcoa reported better-than-expected results and the company’s chief financial officer reported working capital improvements during a recent Q1 earnings call. CFO Charles McLane said days working capital, or the time it takes for the company to turn assets into cash, fell seven days from the [...]
Read more(The Wall Street Journal, 9 April 2012) In Brief: S&P 500 companies recorded higher sales, profits, and employment levels (although most jobs were added outside the US) in 2011 than they did in 2007, according to a Wall Street Journal analysis of corporate financial reports. They are also spending more on capital (expenditures rose 19% [...]
Read more(Bloomberg Businessweek, 4 April 2012) In Brief: Several studies indicate the answer is “yes.” Our View: As CEB Executive Director Michael Griffin recently told The Wall Street Journal, our research indicates that 47% of executives expect to increase capital expenditures in the next 12 months, up from only 37% in Q4 of last year. Only [...]
Read more(CFO, 4 April 2012) In Brief: Despite considerable uncertainty over the future of health care and the end of patent protection for many top-selling drugs, revenue-generating pharmaceutical companies still entice investors, these writers say. Life-sciences companies with high “reinvestment rates” – those that put their earnings primarily into acquisitions and investments – generate more growth, [...]
Read more(CFO, 23 February 2012) In Brief: A number of investment-grade corporations issued multiyear bonds last week after euro zone countries agreed on another $170 billion bailout for Greece. Our View: Our research shows that the best finance teams create financial and strategic policy alignment. Near- and long-term business strategy dictates how external funding will enable [...]
Read more(The Wall Street Journal, 15 February 2012) In Brief: Primary dealers held corporate bonds valued at $43 billion in early February, down from $95 billion in June. Their departure from the market could make issuers pay more for their debt. Our View: Our research shows that the best finance teams create financial and strategic policy [...]
Read more(The Globe and Mail, 10 February 2012) In Brief: A columnist contends that stock buybacks don’t benefit shareholders, because most companies tend to make expensive purchases when prices are high – and afterward, the value of the stock tends to decline. Our View: When returning cash to shareholders, companies should use methods that reflect long-term [...]
Read more(CFO, 10 February 2012) In Brief: In recent months, spreads have tightened for speculative-grade bonds as investor appetite for the assets has increased. One portfolio manager highlighted the opportunity for companies by stating, “If I were a CFO and looking at my capital structure I’d be looking to take advantage of rates … Why not [...]
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