Finances of Apple Inc

Finances of Apple Inc Apple, Inc. (APPL), founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, was started in a small garage in California, but is now worth over $1 trillion. Apple is a technology and telecommunications equipment company that designs, manufactures, and sales a multitude of various hardware and software products: smartphones, tablets, headphones, watches, computers, etc.; Apple also provides various streaming and licensing services as well. Recently, Apple has been working with Goldman Sachs and Mastercard to launch a credit card, known as the Apple credit card; it has great incentives (such as cash-back and low interest rates) and offers more accessibility and security than other credit cards (Krooney, 2019). The Apple credit cards were created to get more of its customers to use Apple Pay instead of other payment firms (such as Square or PayPal). Apple operates in various geographic segments across the globe: America, Asia, China, Europe, and Japan (AAPL, 2019) The products and services that Apple offers its customers is only one reason why it is currently one of the most successful companies (one of the Big Four technology companies) in the world. Apple is the largest publicly traded corporations in the world due to its market capitalization, and was the first United States company to reach a $1 trillion market value. Apple has been on the receiving end of criticism for its tax-avoidance/low-tax practices. Through the implementation of forming subsidiaries across the world, Apple has been able to cut the amount of taxes that it has to pay around the world. However, this has caused controversy because after a two-year investigation, it had been determined that Apple had received illegal State aid from Ireland; the EU commissioner made Apple repay the largest tax fine that has ever occurred ($14.5 billion plus interest). One reason that Apple has made it as far as it has is due to its remarkable ability to strategize with its capital structure by leveraging debt and increasing equity (Carmichael, 2020); Apple’s ability to shift and adapt to its changing environment has been one of its greatest business attributes. To understand Apple’s financial state and structure, equity capitalization, debt capitalization, debt-to-equity ratio, and enterprise value must be examined. Apple’s equity capitalization boils down to roughly 4.57 billion shares and its total stockholders equity equalling $96.5 billion (consists of $43.4 billion of common stock at par value and additional paid-in capital, and $53.7 billion in retained earnings) (Carmichael, 2020). Apple’s debt capitalization has increased almost by two-thirds in the last three years. Apple’s total liabilities are approximately $225.8 billion with $89.7 billion being current liabilities and $136 billion being non-current liabilities (Carmichael, 2020). Concerning Apple’s debt-to-equity ratio, there has been a significant increase which has mostly occurred over the last 36 months. Assessing Apple’s enterprise value (EV) has shown that its market cap and cash have steadily risen, and has Apple’s EV at $1.12 trillion. Though Apple had a small and humble beginning, Apple was able to become one of the most successful companies in the world, and was able to break through various records that were once seen as un-reachable. Apple’s product diversity, market-share, and global reach have all led to the success of Apple, and its financial management skills have propelled itself ahead of its competition. Even with its questionable tax-limiting practices (and fines), Apple continues to go strong and has shown the world that there are various financial strategies that can be implemented in order to minimize the amount of money that a company has to expend. The diversification of Apple’s finances has proven to its stockholders that their money is secure and that the investment risks are significantly lower when compared to any other publicly traded United States company.