This document analyzes Apple's balance sheet to highlight three important traits: size, liquidity, and solvency. It finds that Apple is one of the largest companies in America in terms of market capitalization, total assets, and revenue. Apple's current ratio indicates adequate liquidity within typical ranges. Its debt-to-equity ratio is less than 1, demonstrating strong solvency.

1. APPLE'S BALANCE SHEET
3 LESSONS FOR INVESTORS

2. APPLE'S BALANCE SHEET CASTS
LIGHT ON THREE OF THE IPHONE-
MAKER'S MOST IMPORTANT TRAITS.

3. SIZE | LIQUIDITY | SOLVENCY

4. ASSETS & EQUITY
ARE THERE ENOUGH CURRENT
ASSETS (CASH & EQUIVALENTS) TO
COVER CURRENT LIABILITIES?
DOES EQUITY EXCEED DEBT?
SIZE | LIQUIDITY | SOLVENCY

5. THESE TRAITS GIVE INVESTORS A
SENSE OF APPLE'S GROWTH
POTENTIAL, AS WELL AS OF THE
VULNERABILITY OF ITS BUSINESS
MODEL.

6. BEFORE DIGGING INTO THESE
TRAITS, LET’S BRIEFLY REVIEW THE
BALANCE SHEET ITSELF.

7. EQUITY
LIABILITIES
ASSETS
THE BALANCE SHEET
1. THE BALANCE SHEET
REVEALS A COMPANY’S
ASSETS, LIABILITIES,
AND OWNERS’ EQUITY
ON THE FINAL DAY OF A
FISCAL QUARTER OR
YEAR.
2. THIS IS WHY IT’S
OFTEN REFERRED TO AS
A SNAPSHOT OF A
COMPANY’S FINANCIAL
CONDITION.
3. THE “ACCOUNTING
EQUATION” HOLDS THAT
ASSETS MUST ALWAYS
EQUAL LIABILITIES PLUS
OWNERS’ EQUITY.

8. 1. SIZE

9. YOU PROBABLY WON'T BE
SURPRISED TO HEAR THAT APPLE IS
ONE OF THE BIGGEST COMPANIES IN
AMERICA.

10. $648 billion
$290 billion
$119 billion
$234 billion
Market
Capitalization
Total
Assets
Shareholders'
Equity
Revenue
(ttm)
4 WAYS TO MEASURE APPLE'S SIZE
FOUND ON APPLE'S BALANCE SHEET

11. 9TH18TH APPLE IS THE 9TH BIGGEST
COMPANY ON THE S&P 500
BASED ON EQUITY.
IT'S THE 18TH LARGEST WHEN
MEASURED BY ASSETS.

12. THANKS TO APPLE'S ALREADY
CONSIDERABLE SIZE, IT ISN'T LIKELY
TO GROW AS FAST AS, SAY, A NEWLY
LISTED GROWTH STOCK.

13. 2. LIQUIDITY

14. THE CURRENT RATIO IS A COMMON WAY
TO MEASURE LIQUIDITY.

15. IT’S CALCULATED BY DIVIDING A
COMPANY’S CURRENT ASSETS BY ITS
CURRENT LIABILITIES.

16. $89 BILLION
$81 BILLION
= 1.11
APPLE'S CURRENT
ASSETS
APPLE'S CURRENT
LIABILITIES
APPLE'S CURRENT
RATIO

17. HOW DOES APPLE'S CURRENT RATIO
COMPARE TO OTHER LARGE-CAP
STOCKS?

18. -
1
2
3
4
5
6
← 100 BIGGEST S&P 500 COMPANIES →
←CURRENTRATIO→
54% OF S&P 500 COMPANIES
HAVE CURRENT RATIOS
BETWEEN 0.75 AND 2.0
THE CURRENT RATIOS OF THE 100
BIGGEST S&P 500 COMPANIES

19. BY THIS MEASURE, THEN, APPLE'S
LIQUIDITY IS WITHIN THE USUAL
RANGE, FALLING BETWEEN 0.75 AND
2.0.

20. 3. SOLVENCY

21. LAST BUT NOT LEAST IS SOLVENCY,
WHICH IS MEASURED BY THE DEBT-TO-
EQUITY RATIO.

22. THIS IS CALCULATED BY DIVIDING A
COMPANY’S DEBT BY ITS EQUITY.

23. $64 BILLION
$119 BILLION
= 0.54
APPLE'S DEBT
APPLE'S
EQUITY
APPLE'S DEBT-
TO-EQUITY RATIO

24. THERE’S NO HARD-AND-FAST RULE
WHEN IT COMES TO THE DEBT-TO-
EQUITY RATIO, THOUGH A SMALLER
RATIO (LESS THAN 1) IMPLIES THAT A
COMPANY IS BETTER POSITIONED TO
SURVIVE AN INTERUPTION TO ITS
REVENUE.

25. HOW DOES APPLE'S DEBT-TO-EQUITY
RATIO COMPARE?
2.98
2.17
0.56 0.49
0.28 0.20
0.54
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
IBM MCD COST PG JNJ XOM AAPL

26. BECAUSE APPLE'S DEBT-TO-EQUITY
RATIO IS LESS THAN OR EQUAL TO
1.0, IT'S SAFE TO SAY THE COMPANY
IS SOLVENT.

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