Corporate Japan - The Impact of Cash

One response to 'Corporate Japan, Still Watching the Sky' was to ask what corporate Japan's return on assets would look like if you stripped out the increasing cash holdings.   So here it is:

 

RoA for this huge sample, using pre-tax operating profits was running at 3.8% in 2014, slightly lower than the 2007 peak of 4.2%. If one were to imagine a world in which corporate Japan divested itself of that cash, that RoA for 214 would rise to 4.3%, compared to a 2007 high of 4.6%.  Looking at the impact of those cash holdings on RoA, during 2014 they stripped 48bps off  RoA. That's the highest since the zaiteku days of the bubble.