Does Apple borrow money?
Apple first. If you look at the interest rates on Apple's $14 billion borrowing early this month, it becomes instantly obvious why the company went to the debt market to raise money to buy back stock rather than tapping into its $200 billion or so of cash and marketable securities.
Apple Inc. makes borrowing during a pandemic look as easy as pie. The iPhone maker on Monday borrowed $8.5 billion with a four-part bond deal, adding its name to the roster of U.S. investment-grade companies borrowing a record amount of debt in the corporate bond market during the pandemic.
Apple Pay Later is designed for responsible spending. The limit for each loan is $1000. And loan payments work only with debit cards, so you're not taking on more debt to pay back loans.
Shop now. Pay over time. With Apple Pay Later, purchases between $75 and $1000 can be split into four interest-free payments over six weeks. To apply for a loan and make a purchase, simply choose Apple Pay at checkout and select the Pay Later tab.
Apply when checking out with Apple Pay
On your iPhone or iPad, choose Apple Pay at checkout. Tap the Pay Later tab, then tap Continue. Follow the onscreen instructions to apply for an Apple Pay Later loan. Confirm your personal information, then tap Agree & Apply.
If you had invested $1,000 in Apple stock on Jan. 24, 1984, today, you would have $1,593,809. Likewise, if you had invested $1,000 in an index fund replicating Nasdaq, you would have $55,090. A similar $1,000 investment in an index fund that replicates the S&P 500 would be worth $29,230.
The borrowing is profitable for the company's shareholders by at least one measure: the company's earnings yield, a measure of how much the company earns relative to its share price, is around 5.6%, while it can borrow for 30 years for less than 3%. Apple's not the only one seizing this golden opportunity.
Apple isn't just borrowing to benefit from inflation. They're strategically deploying this capital in areas that yield higher returns. One such area is stock buybacks. Over the past decade, Apple has reduced its outstanding shares from 26 billion to 16 billion, effectively boosting its stock price.
If they were to repatriate that money, they would incur a substantial tax burden. However, due to th growth of the company, investors have been asking for dividends and share buybacks. In order to afford this Apple needed cash in the US, that is why they sold bonds (debt).
If you look at Apple's 2023 10-K, you will see that its shareholder's equity at the end of September was $62.15 billion, up from $50.67 billion in 2022. Its total debt in 2023 was $123.93 billion, down from $132.48 billion in 2022. As I said previously, its debt/equity ratio, according to the Barchart data, is 1.63.
Does Apple check credit score?
We look at a number of factors like your credit score, credit report, and your Apple Pay Later purchase and repayment history to make credit decisions. We may do a soft credit inquiry for evaluating your Apple Pay Later application, which won't impact your credit score.
There are multiple FICO Score versions available for lenders to use. Apple Card uses FICO Score 9. FICO Score 9 ranges from 300 to 850, with scores above 660 considered favorable for credit approval.
You may be required to verify your identity with a government-issued photo ID, and if you freeze your credit reports, you'll need to schedule a thaw of your TransUnion report before applying. Apple lists several factors that could cause your application to be denied, including having a low credit score (under 600).
With Apple Pay Later, purchases between $75 and $1000 can be split into four interest-free payments over six weeks. To apply for a loan and make a purchase, simply choose Apple Pay at checkout and select the Pay Later tab. And you can easily view your payment schedule to track deadlines and payoff progress in Wallet.
Now, why would a company borrow money if it still has so much money just lying around? Well, in this particular case, Apple simply wants to pay an old loan off by borrowing a new one. The reason is rather straight forward. This loan has a lower interest rate than the old one.
Installment Loan.
You will be required to apply for and enter into a 24-month 0% APR installment loan (“Installment Loan”) for the full retail price of the eligible iPhone (“Financed iPhone”), and if purchased at an Apple Store, applicable taxes and fees.
Those gains translate to a 36.6% compound annual growth rate for Apple compared to a 7.4% CAGR for the S&P 500 in that time. That means that $10,000 in AAPL stock purchased 20 years ago would be worth about $5.08 million today, assuming reinvested dividends.
Cupertino, California Apple today announced a new $410 million award from its Advanced Manufacturing Fund for II-VI, a leading manufacturer of optical technology. Today's award builds on an initial $390 million awarded from Apple's Advanced Manufacturing Fund in 2017.
What does that look like on a brokerage statement? Check out the above chart and you'll see that if you invested $1,000 in Apple stock 20 years ago, it would today be worth almost $530,000. The same $1,000 invested in the S&P 500 would have theoretically turned into $6,186 over the same period.
Beneficial capital allocation
This massive position provides a financial windfall. Apple pays a dividend that yields a measly 0.52%. But based on the current quarterly payout of $0.24, Buffett's firm receives an annualized $879 million from its equity position in the tech giant.
What did Warren Buffett pay for Apple stock?
Buffett went on to praise Apple CEO Tim Cook as “one of the best managers in the world” and last year said that the company “just happens to be a better business than any we own.” Berkshire Hathaway purchased an additional $31 billion in Apple shares in 2022.
High returns. Another less obvious reason Buffett is still an Apple investor is simple because he believes the stock is going to continue generating market-beating returns over the long term, which is exactly what it has done in the past.
Apple has a low net debt to EBITDA ratio of only 0.27. And its EBIT covers its interest expense a whopping 648 times over. So we're pretty relaxed about its super-conservative use of debt. The good news is that Apple has increased its EBIT by 4.1% over twelve months, which should ease any concerns about debt repayment.
Total debt on the balance sheet as of December 2023 : $9.57 B. According to Tesla's latest financial reports the company's total debt is $9.57 B. A company's total debt is the sum of all current and non-current debts.
While never actually filing for bankruptcy, Apple (AAPL) was on the verge of going bust in 1997. At the last minute, arch-rival Microsoft (MSFT) swooped in with a $150 million investment and saved the company.
