Recession Has Bernanke, Greenspan Agreeing Companies Have Cash
By Rich Miller
April 14 (Bloomberg) -- The U.S. economy has what Alan Greenspan calls one ``major advantage'' as it falls into a recession: Businesses are in far better financial shape than they were entering the past two contractions.
Corporations outside of financial services -- from Cisco Systems Inc. to Coca-Cola Co. -- have collectively socked away more than half a trillion dollars in cash. They have also reduced short-term debt and cut inventories to record-low levels in relation to sales, leaving them better prepared than in the past to weather a contraction.
``We still have what, at the moment at least, appears to be a reasonably good real economy, as distinct from finance,'' the former Federal Reserve chairman said at an April 8 conference...
Debt as a percentage of net worth for non-financial companies outside of farming was 61.3 in the fourth quarter of last year, compared with 68 at the start of the 2001 recession and 93.6 in the 1990- 91 contraction, Fed figures show.
``Cash flows are more than adequate, and the amounts of monies that they need are very readily financed in the weakened credit markets,'' Greenspan said at the April 8 conference.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aUv3WCFs__qw&refer=exclusive