Advertisements

Liquidity issues – Apple has more cash than the United States


I read a new report on the BBC iPhone app this morning and just had to write about it. Over the coming months I will be writing a series of posts on analysing businesses. One area I’ll cover is liquidity and solvency. Liquidity is the ability to turn assets into cash, while solvency is the ability to pay debts as they fall due.  Now, we have been hearing quite a lot about some European countries and the US having debt problems.  Things really come to a head when those debts cannot be repaid, and to repay them, you need cash. According to the report by the BBC, Apple Inc had $76 billion in liquid resources (cash and other assets easily converted to cash) according to its most recent accounts.  The report puts the liquid resources of the US $73 billion. When I read this I started to understand why it is so important for the US to raise more cash – hence the need to raise it’s borrowing limit. If the US were a small business, there’s a good chance it would be gone by now, as it would have little cash and no way to raise more.  Watch out for more posts on business analysis soon. In these posts I’ll write about some common ways to evaluate and analyse how a business is doing.

Advertisements

Tags: ,

About martinjquinn

I am an accounting academic, accountant and author based near Dublin, Ireland.

3 responses to “Liquidity issues – Apple has more cash than the United States”

  1. Chriss says :

    Incredible news. I cant believe that Apple has more cash resources than the states. I think the comparison should be made on like to like basis. There is no comparison of a company with a country. If you analyze US situation they are tied up in lots of things specially security of their country and Apple is only concerned with profits security. This comparison is not justifiable in my opinion.

    Nabeel
    Free Financial Statement Analysis

    • martinjquinn says :

      Yes, I agree you cannot compare a country with a firm as they are not alike. My main reason for writing this post was to point out the need for having cash. It does not matter if it’s a country or a company, cash is still necessary. I will be writing more posts on ratio’s in a while, so I’ll go into more detail then

  2. CollateralManagement says :

    I always new apple would make it. And to think that I bought shares when they use to be $14.00

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: