Why do big companies have debt?
Debt provides an opportunity to extend your cash runway between raise rounds. If your burn rate leaves you without enough time and funds until more capital can be raised, debt is a worthwhile consideration. Working to increase sales and reduce expenses is also worthwhile, but results are not guaranteed.
Debt financing occurs when a firm sells fixed income products, such as bonds, bills, or notes. Unlike equity financing where the lenders receive stock, debt financing must be paid back. Small and new companies, especially, rely on debt financing to buy resources that will facilitate growth.
Many fast-growing companies would prefer to use debt to support their growth, rather than equity, because it is, arguably, a less expensive form of financing (i.e., the rate of growth of the business's equity value is greater than the debt's borrowing cost).
Corporate debt is usually categorized into long-term and short-term types, and can be analyzed through various financial ratios to assess a company's financial health. Only a small handful of public companies today have zero or near-zero debt.
There are other advantages to carrying debt. If companies need cash and are paying interest on their debt, that interest is tax-deductible, said David Smith, the Virginia Bankers Association professor of commerce at the University of Virginia. “That helps reduce their tax burden,” he said.
Tesla's total debt hit its 5-year low in December 2022 of 5.748 billion. Tesla's total debt decreased in 2020 (13.337 billion, -8.5%), 2021 (8.873 billion, -33.5%), and 2022 (5.748 billion, -35.2%) and increased in 2019 (14.576 billion, +5.4%) and 2023 (9.573 billion, +66.5%).
Leverage. Due to the zero interest rate policy (ZIRP) environment, Apple began issuing its first bonds and notes in 2013, underwriting a total of $64.46 billion worth of debt. Apple made this move not because it needed the capital but because it was essentially receiving free money.
Total debt on the balance sheet as of December 2023 : $108.04 B. According to Apple's latest financial reports the company's total debt is $108.04 B. A company's total debt is the sum of all current and non-current debts.
Some examples include: Business Loans: Debt taken to expand a business by purchasing equipment, real estate, hiring more staff, etc. The expanded operations generate additional income that can cover the loan payments. Mortgages: Borrowed money used to purchase real estate that will generate rental income.
As of February 2023, the Japanese car manufacturer Toyota was the company with the highest debt worldwide, amounting to 217 billion U.S. dollars. The Chinese property developer Evergrande followed in second with a debt of roughly 170 billion U.S. dollars, with Volkswagen following in third.
Is Netflix in debt?
According to Netflix's latest financial reports the company's total debt is $14.54 B. A company's total debt is the sum of all current and non-current debts.
Analysis. Apple's total debt for fiscal years ending September 2019 to 2023 averaged 124.7 billion. Apple's operated at median total debt of 123.9 billion from fiscal years ending September 2019 to 2023. Looking back at the last 5 years, Apple's total debt peaked in September 2021 at 136.5 billion.
Myth 1: Being debt-free means being rich.
A common misconception is equating a lack of debt with wealth. Having debt simply means that you owe money to creditors. Being debt-free often indicates sound financial management, not necessarily an overflowing bank account.
The bottom line
Printing more money is a non-starter because it'd break our economy. “It would take care of the debt but at a price that's far too high to pay,” Snaith says.
It wouldn't be historically unprecedented. In fact, it's been done many times in the past. But nothing comes free, and though printing more money would avoid higher taxes, it would also create a problem of its own: inflation. Inflation is a general increase in the prices of goods and services throughout an economy.
Any excess cash is better used in different ways. In the case of Apple, it's investment in securities. These investments allow Apple to hedge against currency-related risks, and receive some revenue to keep up with inflation.
Total debt on the balance sheet as of December 2023 : $135.61 B. According to Amazon's latest financial reports the company's total debt is $135.61 B. A company's total debt is the sum of all current and non-current debts.
Total debt on the balance sheet as of December 2023 : $151.10 B. According to Ford's latest financial reports the company's total debt is $151.10 B. A company's total debt is the sum of all current and non-current debts.
Alphabet's operated at median total debt of 28.508 billion from fiscal years ending December 2019 to 2023. Looking back at the last 5 years, Alphabet's total debt peaked in December 2022 at 29.977 billion.
Total debt on the balance sheet as of December 2023 : $88.37 B. According to Microsoft's latest financial reports the company's total debt is $88.37 B. A company's total debt is the sum of all current and non-current debts.
How risky is Apple's debt?
Thus we consider debt relative to earnings both with and without depreciation and amortization expenses. Apple has a low net debt to EBITDA ratio of only 0.39. And its EBIT covers its interest expense a whopping 625 times over. So you could argue it is no more threatened by its debt than an elephant is by a mouse.
106.9B USD. Based on the financial report for Dec 30, 2023, Apple Inc's Free Cash Flow amounts to 106.9B USD.
Total debt on the balance sheet as of December 2023 : $47.69 B. According to Walt Disney's latest financial reports the company's total debt is $47.69 B. A company's total debt is the sum of all current and non-current debts.
Total debt on the balance sheet as of October 2023 : $69.73 B.
Cash on Hand as of December 2023 : $73.10 B
According to Apple's latest financial reports the company has $73.10 B in cash and cash equivalents. A company's cash on hand also refered as cash/cash equivalents (CCE) and Short-term investments, is the amount of accessible money a business has.
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