Some investors might worry that Apple carries $108 billion of long-term debt on its balance sheet. That debt figure alone would qualify as the world’s 139th-most-valuable company. Can Apple afford this massive amount of debt?
Neil Patel for The Motley Fool:
Investors can look at some key metrics to determine whether a business is able to handle its debt burden. When scrutinizing Apple in this regard, it’s clear that the company has absolutely no problem at all with its borrowings.
Apple’s debt ratio of 31% (comparing its debt to assets) has actually come down in recent years. And it demonstrates that there are ample assets backing the company.
The business generated an incredible $114 billion in operating income in fiscal 2023. But it only made $3.9 billion in interest payments. This shows that even if a severe recession happened that crushed demand for its popular hardware devices, lowering revenue in the process, Apple could still easily make good on its payments…
In the past three fiscal years, Apple generated over $300 billion in free cash flow. Based on this result, one could even make a valid argument that Apple would be able to take on even more debt.
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MacDailyNews Take: Apple’s debt load is not a weighty issue.
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I wonder if that debt load is roughly equal to the amount spent on the incredibly stupid idea to make an electric car with no steering wheel and no gas pedal that would be powered by coal, natural gas and nuclear, in order to stop carbon emissions. This may be the dumbest investment ever made by a large business, especially since it never even came close to producing a car. And in the meantime Apple doesn’t make a useful home network, or improve AppleTV to include the obvious camera for FaceTime calls on the big screen or keep a high end Mac or Mac mini updated. What a poor strategy.
It was Steve Jobs who vowed never to borrow from Wall Street. How times have changed.
When a company has that much money, why carry debt and blow earnings on interest? Invest the money instead and make interest instead of paying for it.
Yes, Steve Jobs vowed never to borrow from Wall Street and ALSO not to expose Apple the company to PARTISAN POLITICS. But unfortunately this TALENTLESS, woke CEO Leftist knows better and does not listen.
Simply stupid!…
Who is stupid enough to downvote this post? Out yourselves!
GoeB gobbles up good sense and tells it like it is. GoeB is good. Those downvoting him are nasty narcs with no nads.
What is not stated here is that the debt may not be in the countries where the balance of the profit exists. In the past I remember there was a time when the US gave large corporations a window in which to repatriate funds to the US from abroad at a significantly low rate. This may be a similar situation.
All of the commenters are ungraciously mindful, and or, completely forgetting, that Apple’s rigorous and passionate attention to updating and broadening their emoji library is as consistent as ever. Let’s not forget…this is something Jobs NEVER did, or cared about. Have a heart.
Can someone please explain to me like a 5 year old why Apple, the most successful tech company of all time, needs to borrow a dime from anyone?
As a 6 yo, it’s never made sense to me, but borrowing at insanely low rates (2 yrs ago), enabled many to devote such $$ to investments that yielded above/beyond the debt service cost. It allowed funding almost everything at a gain and w/o spending principle holdings.
Interest payments can be deducted, thereby lowering one’s tax burden. Successful companies often take on debt to help manipulate their quarterly numbers, and Wall Street benefits from the issuance and servicing of said debt. No tangible benefits accrue to the masses, but investment banks profit and executives’ stock options increase from a rising stock price after “beating” quarterly numbers.
Apple has more cash than the debt.
Apple borrowed the money at very low interest rates and invests the cash earning a higher income.
Apple also buying back own stocks and saves dividend payments.