$Apple(AAPL)$ This is a very good response to the important topic of what “Zero Net Balance “ means to Apple investors. It was written in in December 2020.
“Let’s assume that Apple were cash neutral today which means that they would have $106B in debt and the same in cash on hand (this is from the most recent 10K). Of that $106B they need to repay $10.1B per year for the next 5 years (from Note 6 of the 10K).
Apple’s cash from operating activities was $80.7B, subtracting out income tax payments of $9.5B and interest of $3B that leaves $68B. If they continue to pay dividends of $14B then there would be $54B of new cash coming in. (I’m assuming no new financing/investing activities because if we’re going to posit a cash crunch, let’s also assume no one will lend to Apple and that Apple won’t be making acquisitions.)
If Apple’s business were to crater so that new cash coming in were to go to $0 then they could coast for more than 5 years and still have plenty of cash on hand to repay debt of $10.1B per year as it comes due.
I’ve made a lot of simplifying assumptions, but no matter how you cut it, they have lots and lots of cushion.”