Want to know the Cash Balance FTSE 100 companies hold?


Banks and insurance businesses are excluded because it is hard to verify (or believe) if the cash belongs to companies or individuals.

So, the total is reduced to 86 FTSE 100 companies. That is slightly disappointing, but it’s the way research works sometimes.  

When asked why you should invest in this bull market.

One popular answer is the huge cash holdings that corporations hold on their balance sheet.

But, what about the debt? Especially, short-term interest loans due within a year.

What about it?

Borrowing is cheap for the last ten years and annual costs are close to zero. Corporations take advantage to implement buybacks of shares and hike dividends to boost their share price.

However, the problems lie in, how long can debt be cheap? Will this bankrupt corporation in the future, if cheap debt gets rolled over year after year?  

Only time will tell.



Let’s get things underway.


How much money do 86 of the FTSE 100 companies hold in cash?

Below is the table featuring the cash holdings and short-term debt of the FTSE 100 businesses in 2015 and 2016:

As you can see, I had to convert some data (in USD and EUR, that is US Dollars and Euros) back into British Pounds for consistency.

(P.S. The original table with Dollars and Euros signs is found here.)


The Cash Hoard of FTSE 100

Adding the total of cash from 86 UK biggest firms, we find £139.2bn in cash, as of 2016 (up from £130bn). Meanwhile, short-term debt grew by £20bn to £97.7bn.

The biggest cash hoarders were the oil majors BP and Shell with cash in excess of £10bn. Also, Vodafone (surpassing £10bn last year).


Interestingly, take total cash from short-term debt, that increase in cash doesn’t look impressive.  

The £12bn decline from 2015 can mean debt financing was raised to booster cash balances.

Most of these mature businesses pay dividends to pension funds and other shareholders (be it the management themselves).

According to AJ Bell, their findings are the top 10 dividends payer will struggle to pay dividends in 2016. Therefore, it needs to drawdown from cash balance or from increased borrowings.

From Table 1. companies been borrowing more to pay dividends but having enough left over to increase cash balance.   

Call to Action

What do you think of the short-term increase of its debts?

Or, does debt matter, as long as borrowings at record levels?


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