Even the most financially savvy businesses can find more ways to strategically raise capital.
In the past 10 years, shares of Apple (AAPL -1.56%) have crushed the Nasdaq Composite index. Strong financial results have propelled this business to a $2.6 trillion market capitalization.
Despite this impressive performance, some investors might worry that this dominant tech enterprise carries $108 billion of long-term debt on its balance sheet. That gargantuan figure alone would qualify as the world's 139th-most-valuable company.
Can Apple afford this massive amount of debt?
Sizing up the debt burden
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.
Financial prowess
Just because a company has some debt on the books, it doesn't necessarily mean it's a risky stock to own. In fact, in this case, it points to Apple's financial prowess. The tech giant started borrowing aggressively about a decade ago to take advantage of ultra-low interest rates. This has helped to fund its buybacks and dividends.
Moreover, you'd struggle to find a more profitable enterprise than this one. 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. In any case, the tech titan's balance sheet is doing just fine right now.
Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
FAQs
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.
How much long-term debt does Apple have? ›
Long term debt can be defined as the sum of all long term debt fields. Apple long term debt for the quarter ending December 31, 2023 was $95.088B, a 4.56% decline year-over-year. Apple long term debt for 2023 was $95.281B, a 3.72% decline from 2022. Apple long term debt for 2022 was $98.959B, a 9.3% decline from 2021.
What is Apple's forecast for 2024? ›
Apple Sales & Earnings Forecast
For fiscal Q3, Wall Street analysts predict revenue of $77.94 billion and quarterly earnings per share of $1.23. For all of 2024, Wall Street analysts forecast revenue of $359.67 billion and earnings per share of $6.13.
What is Apple's cash to debt ratio? ›
Cash to Debt Ratio measures the financial strength of a company. It is calculated as a company's cash, cash equivalents, and marketable securities divide by its debt. Apple's cash to debt ratio for the quarter that ended in Mar. 2024 was 0.64.
Is Apple a buy hold or sell? ›
Apple has a consensus rating of Moderate Buy which is based on 21 buy ratings, 11 hold ratings and 1 sell ratings. What is Apple's price target? The average price target for Apple is $204.77. This is based on 33 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
How financially stable is Apple? ›
Apple has the Financial Strength Rank of 7.
GuruFocus Financial Strength Rank measures how strong a company's financial situation is.
Why Apple has a lot of debt? ›
Apple isn't just borrowing to benefit from inflation. They're strategically deploying this capital in areas that yield higher returns. One such area is stock buybacks. Over the past decade, Apple has reduced its outstanding shares from 26 billion to 16 billion, effectively boosting its stock price.
Where would Apple be in 5 years? ›
Analysts are expecting Apple to sustain double-digit earnings growth of 11% for the next five years. Based on its fiscal 2023 earnings of $6.13 per share, its bottom line could jump to $10.33 per share in five years.
What will Apple stock be worth in 2040? ›
Apple, the world's largest company with a $2.81 trillion market cap, has grown at over 25% CAGR in the past decade. Based on the S&P 500's historical 11.1% ROI, Apple's stock could reach $1,093 by 2040 and $3,140 by 2050.
What is Apple's prediction for 2040? ›
As we discussed earlier that in 2025 and 2030, the Apple company stock price might touch $310 and $700, respectively. So, if the company continues to give good results and maintains upward growth, Apple stock may reach $1000 by 2040.
Total debt on the balance sheet as of March 2024 : $9.91 B
According to Tesla's latest financial reports the company's total debt is $9.91 B. A company's total debt is the sum of all current and non-current debts.
Does Apple carry a lot of debt? ›
Apple carries over $100 billion of long-term debt on its balance sheet. But the tech titan is also able to produce massive amounts of free cash flow. This easily covers interest payments and funds its stock buybacks and dividends.
How much is Microsoft in debt? ›
Total debt on the balance sheet as of March 2024 : $79.91 B
According to Microsoft's latest financial reports the company's total debt is $79.91 B. A company's total debt is the sum of all current and non-current debts.
Is Apple a strong buy now? ›
Apple Inc.
may be overvalued. Its Value Score of D indicates it would be a bad pick for value investors. The financial health and growth prospects of AAPL, demonstrate its potential to underperform the market.
How high will AAPL go? ›
According to our Apple stock prediction for 2025, AAPL stock will be priced at $ 244.53 in 2025. This forecast is based on the stock's average growth over the past 10 years.
What will Apple stock be worth in 2025? ›
According to the latest long-term forecast, Apple price will hit $200 by the middle of 2024 and then $250 by the end of 2025. Apple will rise to $350 within the year of 2027, $400 in 2029, $450 in 2030 and $500 in 2032.
What is Apple's long-term debt to capital ratio? ›
Long-term debt / capital can be defined as a measurement of a company's financial leverage, calculated as the company's long-term debt divided by its total capital. Apple long-term debt / capital for the three months ending December 31, 2023 was 0.56.
Does Apple have short-term debt? ›
What is Apple Short-Term Debt? Apple's Short-Term Debt for the quarter that ended in Mar. 2024 was $12,759 Mil.
How much debt does Apple have on its balance sheet? ›
Strong financial results have propelled this business to a $2.6 trillion market capitalization. Despite this impressive performance, some investors might worry that this dominant tech enterprise carries $108 billion of long-term debt on its balance sheet.
What is Apple's short-term debt? ›
Apple Inc (AAPL) Short-Term Debt: $12.8 Billion for the quarter ended March 30th, 2024. Since the quarter ended September 28th, 2013, Apple Inc's short-term debt has increased from $0.00 to $12.8 Billion as of the quarter ended March 30th, 2024.
