Data presented by Buy Shares indicates that five giant tech companies control $588.48bn in cash reserves. The figure is based on the latest financial results as of October 2020.
Minimal change in cash reserves despite economic crisis
The 2020 figure represents a drop of 0.78% compared to the 2019 cumulative cash reserves of $593.13bn for the selected companies.
In 2020, Apple’s cash reserve was the highest at $191.83bn representing a drop of 6.83% from 2019’s $205.9bn. Last year, Microsoft cash at hand stood at $139.97bn, an increase of 2.52% from 2019’s $136.52bn.
Alphabet registered the largest gain in cash reserves with a growth of 9.5% to $132.59bn in 2020. The previous year, the figure was $128.08bn.
Online retail giant Amazon last year’s cash reserve was $68.4bn a drop of 4.18% from $58.24bn recorded in 2019. Among the five highlighted companies, Facebook has the least cash at hand for 2020 which was $55.69bn, a drop of 4.37% from $58.24bn recorded the previous year.
The Buy Shares research attempted to put into perspective the minimal change in cash reserves for the tech companies amid the global pandemic.
According to the research report: “Despite recording a minor drop in cumulative cash reserve, the highlighted five tech companies appear not to run out of cash anytime soon. The ability to retain a significant cash reserve enables these companies to remain resilient during phases of economic crises like the one occasioned by the coronavirus pandemic.”
Cash reserves have become a key metric to determine the long-term growth and valuation of companies. The metric is based on how much money companies have after accounting for expenditures. With a clear picture of cash reserves, companies can therefore figure out how much to spend on investments and paying off debt.
In the long run, the cash reserve balance for the tech companies will likely reduce in the future. With access to global cash, some of the firms are gearing up to repay maturing debt and increase shareholders’ returns.