In the last quarter, Google reported $54.4B in cash and short term investments and $14.1B in revenue, Apple reported $42.6B in cash and equivalents and $35.3B in revenue and Microsoft reported $76.7B in cash & equivalents and $19.8B in revenue.
Measured in terms of quarters of revenue held in cash & equivalents, Google and Microsoft are more or less tied at 3.8 quarters, and Apple is running relatively lean at 1.2 quarters.
Despite not paying dividends Google is, proportionate to revenue, not holding any more cash than Microsoft, and Apple is holding far less.
Why is 'revenue' the proper denominator, and not 'earnings' ?
Sure, if revenue hypothetically vanished, cash could cover it, but a lot of revenue is tied to expenses ("cost of goods sold" in the retail world), so if revenue dropped, expenses would as well.
You should be using profit not revenue (also, not all quarters are the same, using merely the most recent one is a bad practice). Measured in terms of years of profit being hoarded google is at 5 years, Apple is at 1 year, and Microsoft is at 3.5 years. No matter how you slice it that's a crap ton of money.
I agree with the GAAP rules, but the GAAP rules require < 90 day instruments. The complexity of rolling $140B every 90 days is insane. You are going to have days where there just isn't enough liquidity.
They are basically managing $100B in house rather than getting screwed by banks every 90 days. GAAP is right, Apple is also right, but saying they only have $40B in cash, is very misleading. They could return $100B to shareholders in 6 months with ease.
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I don't buy the "wallowing in cash" argument.
In the last quarter, Google reported $54.4B in cash and short term investments and $14.1B in revenue, Apple reported $42.6B in cash and equivalents and $35.3B in revenue and Microsoft reported $76.7B in cash & equivalents and $19.8B in revenue.
Measured in terms of quarters of revenue held in cash & equivalents, Google and Microsoft are more or less tied at 3.8 quarters, and Apple is running relatively lean at 1.2 quarters.
Despite not paying dividends Google is, proportionate to revenue, not holding any more cash than Microsoft, and Apple is holding far less.
Why is 'revenue' the proper denominator, and not 'earnings' ?
Sure, if revenue hypothetically vanished, cash could cover it, but a lot of revenue is tied to expenses ("cost of goods sold" in the retail world), so if revenue dropped, expenses would as well.
You should be using profit not revenue (also, not all quarters are the same, using merely the most recent one is a bad practice). Measured in terms of years of profit being hoarded google is at 5 years, Apple is at 1 year, and Microsoft is at 3.5 years. No matter how you slice it that's a crap ton of money.
Apple has $140B of cash/near-cash. It just get's bucketed as long term investments because of GAAP rules.
Apple also has $15B of MBS (mortgage backed securities) on its books. Near cash it is not. GAAP is correct.
I agree with the GAAP rules, but the GAAP rules require < 90 day instruments. The complexity of rolling $140B every 90 days is insane. You are going to have days where there just isn't enough liquidity.
They are basically managing $100B in house rather than getting screwed by banks every 90 days. GAAP is right, Apple is also right, but saying they only have $40B in cash, is very misleading. They could return $100B to shareholders in 6 months with ease.