After carefully reviewing Apple’s 2018 10 K report their investing activities consist up “purchases of marketable securities” which were valued at $71,356,000 in 2018 and that was more than doubled in the previous year of 2017 which was $159,486,000. “Marketable securities are defined as any unrestricted financial instrument that can be bought or sold on a public stock exchange or a public bond exchange.” (Investopedia.com) Purchases of marketable securities are Apple’s main investments and the importance of this particular “investing activity” is vital because it gives the company the opportunity to earn interest rather than having their cash sit idle, while also giving them the flexibility to use the cash when needed in case an acquisition opportunity arises they will be able to pull the cash and act swiftly.
Apple’s purchases from marketable securities were down more than half the number the previous year in 2017 which could potentially mean that they acquired companies or pay off loans and debts that may have incurred.
The Proceeds from maturities of marketable securities were $55,881,000 in 2018, and down to $31,775,000 in 2017. This means that Apple almost doubled its profit from marketable security investments from 2017 to 2018. Apple’s 2016 proceeds were $21,256,000 which shows that Apple has consistently profited from their investing habits year to year.
Payments made in connection with business acquisitions were $721 million in 2018, and.$329 million in 2017 respectively. Apple’s net sales were around $265 Billion in 2018 thanks to some of their biggest acquisitions over the past couple of years which include the popular music app Shazam which allows the user to hold their phone up, and their phone will identify a song that they are curious about.
Apple’s “largest acquisition to date was Beats Electronics, which was purchased in 2014 for roughly 3 billion in cash and stocks.” (Investopedia.com/investing) Beats Electronics was founded by popular musician Dr. Dre and are many popular athletes and celebrities go-to headphones. Apple has displayed an aggressive acquisition strategy in which they have consumed over 100 companies since their initial launch of Apple products.
Apple’s payment’s for acquisitions’ of property, plants, and equipment were $13,313,000 in 2018, and $12,451,000 in 2017, and $12,734,000 which have marginally been the same over the past 3 years which means that Apple has not invested into additional buildings recently. Apple’s latest investment was its brand new state of the art headquarters named Apple Park which is located in Cupertino, California which cost an estimated 5 billion dollars. Apple Park has drawn comparisons to UFO’s and even the Pentagon as the headquarters expands over 2.8 million square feet, and can accommodate approximately around 12,000 employees.
Apple’s overall cash that was generated by investing activities was $16,066,000 in 2018 which is down substantially from the previous year which was at $46,446,000 in 2017 which indicates that Apple did not heavily invest this year compared to its previous years.
When referring to Apple’s consolidated balance sheet in 2018 Apple’s current assets are made up of Cash and cash equivalents, marketable securities, accounts receivables, inventories, vendor non-trade accessories, and other current assets which are estimated to about $131,339,000 which was slightly up from the previous year which was $126,645,000. Apple’s major asset is that of marketable securities which grossed over $40 million in 2018. Marketable securities are liquid assets that can be converted into cash at any given notice. Apple’s marketable decreased increased slightly from 2017 to 2018. Overall, Apple’s current assets increased from 2018 to 2017 which means that Apple made a minor profit.
Apple’s non-current assets are made up of marketable securities, property, plant and equipment, other non-current assets which total to $234,386,000 in 2018 and $246,674,000 in 2017. Apple’s primary non-current asset was also marketable securities which accounted for $170,799,000 out of the total $365,725,000 in 2017 and was $194,714,000 out of $375,319,000 in 2017 respectively.
All together Apple’s total assets equaled to $365,725,000 in 2018, and $375,319,000 in 2017. Apple’s total assets were down from the previous year about $10 million which may seem a lot to the average individual but for a company like Apple, it was not a significant drop. Apple’s total assets amass over $300 million in 2017 and 2018 which shows that Apple did not incur any major debt or losses in those 2 years.
For Liabilities and Shareholder’s equity the current liabilities were made up of accounts payable, other current assets, deferred revenue which is a liability in which money has been received for the goods or services but the service has not been performed yet, commercial paper which is issued by corporations to cover short-term obligations, and term debt which is a loan that has a set payment date which can be expanded over several months or even years.
Apple’s non-current liabilities are made up of deferred revenue, term debt, and other non-current liabilities which total up to $141,712,000 in 2018 and $140,458,000 in 2017.
Apple’s total liabilities were $258,578,000 in 2018 and $241,272,000 in 2017 which means when comparing Apple’s total assets and total liabilities we see that Apple continues to earn a profit while its total assets amass their total liabilities by over $100,000,000 in both 2018 and 2017.
Apple’s total shareholders’ equity in 2018 was $107,147,000 which was down significantly from 2017 which totaled about $134,047,000. After using the current ratio formula which is the current assets divided by current liabilities it shows us that Apple’s current ratio is 1.12% in 2018 and 1.27% in 2017 which is hovering around the 1.2 to 2% mark in which every company tries to strive for. If a company’s current ratio drops below 1% it can be problematic for the company because it could mean that the company does not have sufficient liquid assets to cover their short-term liabilities, in Apple’s case they are above the 1% mark which means they are able to pay off their short-term liabilities while still being able to gross a profit. In the past 2 years Apple has consistently been able to turn a profit due to their high demand for cell phones, watches, and laptops while pushing their innovative but user-friendly devices.
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