Companies increased their cash and short-term investment balances in the fourth quarter, according to the AFP Corporate Cash Indicators (AFP CCI), a quarterly study that measures recent and anticipated changes in U.S. corporate cash balances. Quarter-to-quarter, 49 percent of reporting organizations had greater cash balances at the end of 4Q11 than they had at the end of 3Q11.  

Meanwhile, companies reported that their investment selection for cash and short-term investments had become slightly more aggressive, with a net five percent of respondents indicating a more aggressive investment selection.

Year-over-year, cash hoarding increased, with 43 percent holding larger balances at the end of 4Q11 than they had at the end of the 4Q10.

Looking ahead, 32 percent expect to further build cash and short-term investment balances during 1Q12 compared to 27 percent that expect to reduce balances. The difference (+5), however, was significantly smaller than the +13 and +17 reported in October and July 2011 surveys, suggesting the pace of building cash reserves may be slowing.

Represents "increase" percentage minus "decrease" percentage.

"With the U.S. election approaching and uncertainty with the euro, caution reigns among corporate treasurers," said Jim Kaitz, AFP's president and CEO. "Although they are choosing slightly more aggressive short-term investment vehicles, the stance that they are adopting for early 2012 is wait-and-see."

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