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A Simple Analysis Of The Cash And Cash Equivalents Of S&P 500* Companies

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  • Microsoft, Google and Apple are the 3 companies with the largest cash on hand.
  • Relative to the assets the biggest cash holders are Verisign, Arista Networks and Intuit.
  • The companies that have the greatest increase in cash and cash equivalents are Lamb Weston Holdings, Cabot Oil & Gas Corporation and Waste Management.

A well known catch phrase says that “In God we trust, all others pay cash”. Amusing as it is, this article is not about the commercial credit or the preferred form of payments, the following lines present a short and simple analysis on the cash and cash equivalents of the S&P 500 companies.

A few technicalities

Before jumping into the analysis itself, the reader should be aware that the original source of this data is the 10-K (or 10-Q) SEC forms that the companies submitted. The terms “cash” and “cash and cash equivalents” are used interchangeably. Also, data from the last 2 forms were taken into consideration. Last but not least, Python, the programming language, was used for data retrieval and analysis.

The Richest Companies in Babylon

The companies that hold the most cash are: Microsoft, with approximately 136.5 billion dollars, Alphabet with 119.6 billion dollars and Apple, with 90.9 billion dollars. This is a lot of money for a company to hold as cash. Setting aside the fact that these companies have more cash on hand then the annual budget of some countries, the truly interesting fact here is that combined, in a true Pareto fashion, these three companies account for a bit over 20% of all cash that the S&P 500 companies hold.

Cash Relative to Assets

When looking at the proportion of cash in total assets these three companies no longer occupy the three top spots. These spots are occupied by Verisign, with a percentage of 65.69 of cash in total assets, followed by Arista Networks - 65.09 and Intuit with 64.49.

It is interesting to see if the patterns of accumulating cash will continue for these companies or other more pressing matters will make these companies decrease their cash holdings.

Increase in cash

When comparing the two consecutive annual periods, the biggest procentual increases in cash holdings belong to Lamb Weston Holdings with an increase of about 110%, followed by Cabot Oil & Gas Corporation, with an approximate increase of 86% and Waste Management with an increase of about 57%. I did not include Concho Resources in this list. This company had no cash in the pre-previous form and 70 million dollars in the last form. The reasons on why this is so, are beyond the scope of this article, maybe a future one…

“... all others pay cash”

Although simple and not comprehensive, this analysis highlights the companies that have the most cash, the companies that have the most proportion of cash as a proportion of their assets, and the companies that have increased their cash the most. It is my opinion that companies mentioned in this article will not have to rely on their supplier’s trust when entering commercial agreements as, you guessed it, they have cash.

* included in the S&P 500 and not included in this analysis are: FTI, ENPH, DISCK, FRC, AON, UAL, VTRS, TROW, EVRG, XRX, PEG

Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I own Vanguard Mega Cap Growth ETF shares which are exposed to, among others, Microsoft, Google and Apple

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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