Liquid Assets

One year after the recession began total corporate liquid assets dipped to $ 1.4 trillion in 4Q 2008...

...in the five quarters since (through the first quarter of this year), total liquid assets increased dramatically to $1.8 trillion (an increase of $400 billion) while liquid assets as a percent of total corporate assets—on a market value basis—increased from 5% to 7%.

That means that seven cents of every dollar of total corporate assets (the sum of the market value of its capital structure consisting of short- and long-term debt plus shareholder equity) is now invested in the equivalent of a corporate "piggy bank" as opposed to investments in its long-term productive capital (expected to earn a return in excess of a company's cost of capital).

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Adam

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