Apple is known for maintaining a large cash reserve: in 2022, cash balance was around
$24 bln (+ $23 bln of marketable securities), not to mention the ongoing investment activities and repurchases of own stocks – which amounted to $89 bln!
They've been successful in generating positive cash flow through high-profit margins, strong sales, and a diverse product line.
Don’t be fooled by the decreasing value of cash on hand…
Look at what they generated and reinvested!
Effective cash management practices at Apple include…
→ Inventory Turnover
Apple keeps low levels of inventory and relies on a just-in-time manufacturing process: this reduces storage costs and risks of obsolescence
→ Diversification
Their revenue streams are diversified, coming from products like iPhones, iPads, MacBooks, as well as services like iCloud, Apple Music, and App Store sales
BUT ALSO IMPORTANTLY…
→ Investment
They invest their large cash reserves in short-term, low-risk, liquid assets, ensuring that cash is readily available for strategic acquisitions or research and development
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