A look at Apple’s debt

Over the past three months, shares of Apple Inc. (NASDAQ: AAPL) increased by 56.13%. Before we look at how big debt is, let’s look at how much debt Apple has.

Apple’s debt

Based on Apple’s financial statements as of July 31, 2020, long-term debt is $94.05 billion and current debt is $18.68 billion, for a total debt of $112.72 billion. of dollars. Adjusted for $33.38 billion in cash equivalents, the company’s net debt is $79.34 billion.

Investors look at the debt-to-equity ratio to understand a company’s financial leverage. Apple has total assets of $317.34 billion, bringing the debt ratio to 0.36. Generally speaking, a debt ratio greater than 1 means that a large part of the debt is financed by assets. As the debt-to-equity ratio increases, the risk of loan default also increases if interest rates were to rise. Different industries have different tolerance thresholds for debt ratios. A debt ratio of 40% may be higher for one industry, while the average for another.

Debt size

Debt is an important factor in a company’s capital structure and can help it achieve growth. Debt typically has a relatively lower cost of funding than equity, making it an attractive option for executives.

However, due to interest payment obligations, a company’s cash flow may be affected. Equity holders can retain excess profits, generated by debt capital, when companies use debt capital for their business operations.

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