Apple filed preliminary documents with the Securities and Exchange Commission (SEC) on Thursday for a four-part debt offering that will comprise notes with maturities ranging from seven years to forty years. The size and timing of the offering were not specified by the corporation.
A total of $113.8 billion of Apple’s (AAPL) long-term debt, including current maturities, is outstanding. The figure is based on a February offering of $14 billion.
Does Apple have a lot of debt?
When Howard Marks said, “The danger of irreversible loss is the risk I worry about… and every practical investor I know worries about,” he did it in a very eloquent way. We constantly examine at a company’s usage of debt when assessing its riskiness, because debt overflow can lead to financial collapse. Importantly, Apple Inc. (NASDAQ:AAPL) has a debt obligation. Is that debt generating a lot of danger for the company?
When Is Debt Dangerous?
Debt is a useful tool for businesses to grow, but if a company is unable to repay its lenders, it is at the mercy of its creditors. Failure to pay a company’s creditors could lead to bankruptcy in the worst case situation. The practice of permanently diluting shareholders of troubled corporations is rare, but it is not unheard of in the debt-ridden sector. It’s also worth noting that debt can be a cheap source of capital, especially when it replaces stock dilution with the ability to invest at high rates of return. When assessing a company’s debt load, the first step is to look at its total cash and debt balances.
What Is Apple’s Debt?
In March 2021, Apple had US$120.2 billion in debt, up from US$109.5 billion a year earlier. For additional information, click on the image. However, cash reserves of $69,8 billion countered this, resulting in a net debt of $50.4 billion.
A Look At Apple’s Liabilities
There are obligations of US$106.4 billion due within the next year, as well as liabilities of US$161.6 billion that are due in the future. In contrast, the company had US$69.8 billion in cash and US$33 billion in receivables due in the next year. As a result, its total liabilities exceed its cash and short-term receivables by US$165.1 billion.
Why does Apple have low debt?
It’s because Apple’s new loan has such a low interest rate. On the $2.5 billion five-year notes, the after-tax interest cost to Apple is lower than the cash dividend that it pays to its common stockholders, particularly. after-tax interest expense.
Is Apple financially strong?
Over the past five years, Apple’s sales grew by 180 percent, bringing in $182 billion in 2014. In fact, the sales trajectory over the last decade is even more amazing, as Apple only generated $13.9 billion in 2004. Over the past ten years, sales have increased by 1,200%.
After two years of stagnant Apple profits, the business posted $39.5 billion in net profit in 2014, down 5% from 2012. The company’s profit margins have been a little lower in recent years due to the high costs associated with the development of new product upgrades and the introduction of the iPad Mini, which has a significantly lower profit margin than any other Apple product.
During the last quarter, Apple was able to not only grow its sales by 30 percent, but also its net profit from $13.07 billion to $18.02 billion, which represents an increase of 38 percent, respectively. Firstly, sales in China grew by 70% and currently account for 21% of overall revenue.
Another factor in Apple’s best quarter ever came from the iPhone, which sold more than 74,4 million handsets in the last three months alone. As many as 574 iPhones were sold each minute in the last quarter, according to Apple’s sales figures. By comparison to the same quarter last year, Apple was able to grow iPhone sales by 57 percent.
Other Apple goods, such as the iPad, are seeing a decline in revenue of 17% year over year.
For comparison, the average price-earnings-ratio for Nasdaq 100 businesses is 22.5 and for the S+P 500 it is 18.9, both of which include Apple.
In light of this, it appears that Apple isn’t being overestimated at the moment. The Nasdaq 100 is a good example of a company with a somewhat higher price-earnings ratio than the rest of the market. It would be fine for Apple to have a PER of between 20 and 25.
A company’s return on equity is one of the most essential financial metrics for long-term investors since it provides a clear indication of the company’s profitability. Last but not least, if the company is constantly lucrative, all investors will put their money into it.
Over the past five years, Apple has consistently generated a return on equity of between 30 and 35 percent, whereas the S&P 500’s average return on equity was between 14 and 18 percent. Apple’s return on equity is twice as high as the market’s return on equity at this time. Return on equity and the equity ratio are two metrics that investors use to determine how effectively a firm has leveraged its earnings. A firm with three-digit total assets has an equity ratio of 47 percent, which is exceptionally high for Apple.
A equity ratio of 60% to 67% existed in the early years of Apple. A fall in this rate can be attributed to the fact that Apple issued its first bond in 2013 and took on some long-term debt. His death in 2011 came as no surprise to anyone who knew him.
Apple currently has $178 billion in cash reserves, which it could theoretically use to acquire 480 of the 500 S&P 500 firms. In terms of financial stability, the company’s equity ratio and current cash reserves are quite high. While at the same time, Apple has the unique ability to generate a return on equity that is nearly unheard of, making the Apple stock one of the world’s most traded.
Apple’s dividend yield currently stands at 1.47 percent, which is lower than the S+P 500’s average of 2 percent. The corporation began paying dividends in 2012, and since then, the dividend has climbed from $0,38 to $0,47 per quarter.
A dividend of $1,88 is paid out each year by Apple. When you consider that Apple’s estimated earnings per share this year are expected to be around $9, this seems like a low payout ratio. However, Apple began a massive share repurchase program in 2013 and purchased $45 billion of its own stock last year. A repurchase program that encourages investors to want more stock is always welcomed by them.
Additionally, it reduces shares outstanding, raising earnings per share even if the company’s bottom line remains same. Apple’s earnings per share rose to $6,49 last year, up from $5.72 in 2013 and $6.38 in 2012, despite the fact that profits have been stagnant in previous years. Because fewer shares are outstanding as a result of the purchase of own shares, the firm will be able to pay out a lower dividend while maintaining the same payout per share. The stock price will benefit from each of those factors.
Tim Cook, Apple’s CEO, stated that the business does not want to hoard cash because of the company’s current large cash reserves. As a result of this comment, many analysts believe that the company will offer a substantial compensation package to shareholders. There is already anticipation in the market that Apple will soon reveal a $150 billion initiative for the next three years. In addition, this is a plausible scenario due to Apple’s position in the market.
Over the past year, the company has purchased $45 billion worth of its own stock and distributed nearly $ 11 billion in dividends.
Because of its high return on equity ratio, Apple’s stock has obviously outperformed the S&P 500 over the past five years. There were only roughly 80 percent gains in the S&P 500 throughout that time period. Over the course of this period, the Nasdaq 100 saw a gain of around 130 percent. There was a lot of speculation about Apple’s demise after Steve Jobs’ death in 2011, which led to a big fall in the stock in 2012.
Overall, the company’s financial ratios appear to be in excellent shape. The company’s revenue has grown tremendously over the past few quarters, and it was able to halt a period of stagnation in net earnings. Due to a high equity ratio and large cash reserves, Apple is able to maintain a high level of financial stability. When it comes to the return on equity (ROE), Apple generated 35 percent in 2014, which is twice as much as the S&P 500 average.
When compared to other companies, Apple’s dividend yield of 1.47 percent appears to be somewhat low.
A flaw has been discovered by us since Apple relies so heavily on the iPhone because the sales of all other goods are currently stagnant.
How much is Apple’s 2021 debt?
Total debt for Apple as of January 28, 2021 is $112.04 billion, which includes long-term debt totaling $99.28 billion and current debt totaling $12.76 billion. Net debt for the corporation is $76.03 billion after adjusting for cash-equivalents of $36.01 billion.
Here are some definitions for some of the terms we used in the previous section. A company’s current and long-term debt are defined as the portion of the company’s debt that is due within one year and the portion that is due more than one year. A cash equivalent is defined as cash or any other liquid asset with a maturity of fewer than 90 days. Debt is the sum of current and long-term debts minus cash.
How much is Netflix in debt?
Ten years ago, Netflix took a leap of faith and changed the media landscape. Every year, it spends billions of dollars on licensed and original material to expand its library, and as a result, it has evolved into a pay-TV alternative in the homes of millions of people. To pay for this material, Netflix has accumulated $15 billion in debt since 2011. The corporation has stated that it intends to use its $8 billion in cash on hand to repay its debts that expire in 2021.
Investors should be concerned about Netflix’s expanding debt load as content spending has increased and the business has burnt more cash, according to Netflix doubters like Wedbush analyst Michael Pachter.
“Pachter told CNBC in June 2018 that Netflix had “burned more cash every year since 2013.” “With $10 billion in debt and no end in sight for expenditure, what will happen? ‘Can this corporation pay us back?’ will be a common question in the future. In the event that this occurs, their interest rates will rise. To raise money, Netflix will issue stock. Investors will feel frightened at this point.”
What is Apple’s credit rating?
This grade is based on Apple’s high profitability, a big and increasing installed base of products and services, a great track record of innovation, and exceptional liquidity with about $84 billion in net cash positions.
What company owns Apple?
Since its founding in 1976, Apple Inc. has undergone a series of ownership changes. When the business went public, Steve Jobs failed to acknowledge some of the early employees’ ownership interests. Steve Wozniak did this by offering those early workers $10 million in equity for a symbolic price. As a result, he became only a modest stockholder in compared to Steve Jobs.
In 1985, after Jobs was fired from Apple, he sold his stock and went on to found Pixar. Apple co-founder Steve Jobs received about 8% of Pixar when the business was purchased by Disney. When he passed away, the trust he had established to manage the company’s shares was transferred to his widow. Liquidation was carried out on certain of Apple and Disney’s shares that fell short of the 5 percent threshold. Thus, it is impossible to tell exactly how many shares the Jobs Trust has. Consequently.
There are now two major institutional investors in Apple Inc. (Vanguard Group and BlackRock, Inc). Individuals including Art Levinson, Tim Cook, Bruce Sewell, Al Gore, and Johny Sroujli are among the company’s largest stockholders.
It’s worth noting that Apple’s board of directors includes former US Vice President Al Gore, who has served on the board since 2003. Al Gore sold a portion of his stake in the company in 2017 for more than $30 million. He now owns a single property.
Is Apple still a growth company?
Investors in broad equity market index funds have a large portion of Apple in their portfolios. Nearly 5 percent of the Morningstar US Market Index, which includes 1,439 stocks, has seen its share price rise by more than 80% in both 2019 and 2020. According to other broad indexes, Apple’s weight can approach 6% in the U.S. equities market. Pre-pandemic demand for iPhones and an incredibly loyal customer base allowed Apple to thrive. Investors will learn more about Apple’s financial results on Wednesday, April 28th.
What is Apple net worth 2020?
In 2018, Apple became the first corporation to have a market capitalisation of $1 trillion. As of 2020, it had become the first corporation in the world with a market value of more than $2 trillion. As of 2020, it had a net worth of $65 billion.
How much debt does Facebook have?
On Facebook’s books, the social media company has no long-term debts. The company’s current assets number more than $77 billion, which is enough to satisfy its $30 billion in obligations. In addition, the company’s financial status is expected to continue to improve.
Free cash flow generated by Facebook has exceeded $24 billion over the last four quarters. Since then, it has been able to repurchase $9 billion worth of shares because of its strong cash position.
An antitrust case against the company’s acquisition of Instagram and WhatsApp by the Federal Trade Commission (FTC) is the largest threat to Facebook’s business today, not rising interest rates. But the main platform of Facebook continues to grow. The company is expected to be in good shape even if two of its other businesses fail.
