Apple Inc. shares of AAPL Lost 0.32% in last three months. Before taking a look at the importance of debt, let’s take a look at how much debt Apple has.
apple debt
Based on Apple’s financial statement as of February 3, 2023, long-term debt is $99.63 billion and current debt is $11.48 billion, for a total debt of $111.11 billion. Adjusted for $20.54 billion in cash-equivalents, the company’s net debt is $90.58 billion.
Let us define some of the terms we have used in the above paragraphs. current loan is the portion of the debt of a company which is payable within 1 year, while long term debt Part payable in more than 1 year. cash equivalents Includes cash and any liquid securities with a maturity of 90 days or less. total debt Current debt is equal to long-term debt minus cash equivalents.
Shareholders look to the debt-to-income ratio to understand how much financial leverage a company has. Apple has $346.75 billion in total assets, therefore making the debt-to-income ratio 0.32. As a rule of thumb, a debt-to-equity ratio greater than 1 indicates that a large portion of the debt is financed by assets. A high debt-to-equity ratio can also mean that the company may be putting itself at risk for default if interest rates rise. However, debt ratios vary widely among different industries. A debt ratio of 25% may be high for one industry, but average for another.
importance of credit
In addition to equity, debt is an important factor in a company’s capital structure, and contributes to its growth. Due to its lower funding cost compared to equity, it becomes an attractive option for executives trying to raise capital.
However, interest payment obligations can have an adverse effect on a company’s cash flow. Equity owners can keep the additional profit generated from debt capital when companies use debt capital for their business operations.
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This article was generated by Benzinga’s automated content engine and reviewed by an editor.