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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