The AFP's annual liquidity survey supports the widely held belief that companies are stockpiling their cash.

Almost twice as many survey respondents reported that their organization increased its cash balance over the past year (40 percent) than reduced its cash balance (22 percent). And the trend persisted when respondents were asked what they expect their companies to do in the year ahead: 31 percent said they expect an increase, 19 percent expect a decrease, and 50 percent expect no change in their cash balances over the next year.

In today's economy, what are the key drivers of the cash buildup? Among companies that increased their cash holdings, the majority were able to do so by increasing their operating cash flow, according to participants. Much smaller proportions of companies increased cash holdings by increasing their debt load, acquiring another business or launching new operations, and decreasing capital expenditures. (See Figure 1, below.) Among companies that are holding less cash today than a year ago, acquisition or organic growth was the number-one reason, followed by increased capital expenditures and decreased operating cash flow. (See Figure 2, below.)