Analyze the Consolidated Balance Sheets. What do you see? The Long term Debt has

Question

Analyze the Consolidated Balance Sheets. What do you see? The Long term Debt has increased considerably...does that concern you? How is that explained in the notes to the financial statements? Consider the reasonableness of your answer.
CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 27, 2014 September 28, 2013 ASSETS: Current assets: $ 13,844 11,233 17.460 2,111 4,318 9,759 9.806 68,531 130,162 20,624 4,616 4,142 3,764 S 231,839 S 14,259 26,287 13,102 1,764 3.453 7,539 6,882 73,286 106,215 6,597 1,577 4,179 5,146 S 207,000 Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of S86 and S99, respectively Inventories Deferred tax assets Vendor non-trade receivables Other current assets Total current assets Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable Accrued expenses Deferred revenue Commercial paper $ 30,196 18,453 8,491 6,308 63.448 3,031 28,987 24,826 22,367 13.856 7.435 Total current liabilities Deferred revenue non-current Long-term debt Other non-current liabilities 43.658 2,625 16,960 Total liabilities Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, S0.00001 par value; 12,600,000 shares authorized; 5,866,161 and 6,294,494 shares issued and outstanding, respectively 23,313 87,152 1,082 111,547 839 19,764 104.256 (471) 123,549 207,000 Retained earnings Accumulated other comprehensive income/(loss) Total shareholders equity Total iabilities and shareholders' equity

Explanation / Answer

increase in debt may not necessarily always a cause of concern, we have to look at the facts of the case.

First lets look at Apple business it is doing great both turnover and Net income increased.

Lets look at Cassh and cash equivalents and marketable securities

Cash and investments have increassed by 8,479 million

Increasse in long term debt is 12,027.

If you observe the notes company has repurchased stock (Note 7) - company has spent 45,000 million(can be seen from cashflow) for repurchase of stock.

So the debt was taken because of repurchase of stock. So this is not something which should cause conern if repayment obligation are in line with company's future cashflows.

As per note 6 principle repayment obligation of longterm-debt is as follows

2015

2016

2017

2018

2019

Thereafter

Total

Lets see APPLE cash flow statement

With free cash flow of more than 40,000 million $ every year, repayment of the above scheduled loan is not a concern for Apple.

So the debt increasse is not a concern.

Particulars 2014 2013 Increase/(decrease) Short term-marketable securities            11,233            26,287           (15,054) Long-term marketable securities          130,162          106,215              23,947 Cash and cash equivalents            13,844            14,259                 (415) Total          157,253          148,774                8,479

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