December 8, 2011

Largest Public Companies Continue to Hoard Cash at Record Levels; 1000 of the Largest Now Hold $850 Billion in Cash on Hand

  • REL Research Finds that High Cash Balances Don't Indicate Strong Performance; Companies Still Have Working Capital Improvement Opp of Nearly $800 Billion, With Cash Unnecessarily Tied up in Receivables, Payables, and Inventory

MIAMI & LONDON, December 8, 2011 - Large public companies in the U.S. are continuing to hoard cash at record levels, and 1000 of the largest are now holding $850 billion, according to new research from REL Consulting, a division of The Hackett Group, Inc. (NASDAQ: HCKT).

REL's research, which is based on corporate filings through June of 2011, shows that as revenues have increased over the past year, so has cash on hand, with companies now holding 11 percent more cash than they did in Q2 of 2010.Total debt also increased by 7 percent during the period, indicating that companies are taking advantage of low-cost borrowing opportunities to increase their cash on hand. REL's research also found that companies are beginning to incrementally increase the amount of cash they are putting to use for purposes such as paying dividends, making capital expenditures, and share buy-backs.

At the same time, REL's research shows that working capital performance for 1000 of the largest public companies degraded slightly. Companies are now taking 2 percent longer to collect from customers, and are holding nearly 2.5 percent more in inventory. Companies actually improved payables performance slightly, offsetting some of the losses in other areas. These companies now have nearly $800 billion unnecessarily tied up in receivables, payables, and inventory due to sub-optimized working capital management.

"Cash hoarding continues to be the trend. But high cash balances don't necessarily indicate strong performance," said REL Associate Principal Dan Ginsberg. "The working capital numbers clearly show that while companies managed to right-size their working capital in late 2009, in response to economic challenges, they quickly lost focus once revenue growth returned, and the improvements they made were not sustainable. Companies are now taking their eyes off the ball when it comes to efficiently running their business. Accounts receivables are bloated, and companies are holding more inventory for various reasons, only some of which are strategic."


About REL

REL, a division of The Hackett Group, Inc. (NASDAQ: HCKT), is a world-leading consulting firm dedicated to delivering sustainable cash flow improvement from working capital and across business operations. REL's tailored working capital management solutions balance client trade-offs between working capital, operating costs, service performance and risk. REL's expertise has helped clients free up billions of dollars in cash, creating the financial freedom to fund acquisitions, product development, debt reduction and share buy-back programs. In-depth process expertise, analytical rigor, and collaborative client relationships enable REL to deliver an exceptional return on investment in a short timeframe. REL has delivered work in over 60 countries for Fortune 500 and global Fortune 500 companies.

More information on REL is available: by phone at (770) 225-3600; by e-mail at info@relconsultancy.com; or on the Web at www.relconsultancy.com.


About The Hackett Group, Inc.

The Hackett Group (NASDAQ: HCKT) is an intellectual property-based strategic consultancy and leading enterprise benchmarking and best practices implementation firm to global companies. Services include business transformation, enterprise performance management, working capital management, and global business services. The Hackett Group also provides dedicated expertise in business strategy, operations, finance, human capital management, strategic sourcing, procurement, and information technology, including its award-winning Oracle EPM and SAP practices.

The Hackett Group has completed more than 11,000 benchmarking studies with major corporations and government agencies, including 93% of the Dow Jones Industrials, 86% of the Fortune 100, 87% of the DAX 30 and 52% of the FTSE 100. These studies drive its Best Practice Intelligence Center™ which includes the firm's benchmarking metrics, best practices repository, and best practice configuration guides and process flows, which enable The Hackett Group's clients and partners to achieve world-class performance.