How much cash do Apple and Google have?

201602-apple-google-cashPreviously we looked at how much Apple and Google spend on research and development. Now, let’s take a look at how much cash both companies have on hand.

First, let’s look at the answer to our question. Then we’ll go over some definitions and some context.

The bar chart below gives us the information we need. As of the end of their most recent quarters, Apple has $256.8 billion in cash. Google has $86.3 billion.

And yes, you read that right. Apple has over one quarter of a trillion dollars in cash.

How much cash do Apple and Google have?

We’ll define the three categories in the next section of the post. As we can see in the bar chart, here’s the breakdown across categories of cash:

  • Cash and cash equivalents
    • Apple $15.2 billion
    • Google $12.9 billion
  • Short-term marketable securities
    • Apple $51.9 billion
    • Google $73.4 billion
  • Long-term marketable securities
    • Apple $189.7 billion
    • Google $0

A very quick look at definitions

We tend to think that cash is cash, right? But “cash”, when we’re talking about companies, takes a few different forms. For Apple and Google, we’re going to focus on three forms of “cash”:

  • Cash and cash equivalents
  • Short-term marketable securities
  • Long-term marketable securities

We all know what real cash is. But what are cash equivalents? And short- and long-term marketable securities?

Here’s how Apple defines cash equivalents:

All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents.

And here’s how Apple defines marketable securities:

The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date. Marketable debt securities with maturities of 12 months or less are classified as short-term and marketable debt securities with maturities greater than 12 months are classified as long-term.

Here’s how Google defines cash equivalents and marketable securities:

Cash equivalents and marketable securities are comprised of time deposits, money market and other funds, highly liquid debt instruments of the U.S. government and its agencies, debt instruments issued by foreign governments, debt instruments issued by municipalities in the U.S., corporate debt securities, agency mortgage-backed securities, and asset-backed securities.

The long and short of it? When we talk about corporate “cash”, we’re talking about anything that can be turned into cash quickly and easily. 

You can’t sell manufacturing equipment quickly and easily. You can’t sell real estate quickly and easily. But you can sell treasury securities. Or shares of stock. Or bonds. 

Apple has $256.8 billion in “cash”, of which $15.2 billion is of the cold, hard variety. The remaining $241.7 billion is in securities that Apple can quickly sell for cash. Likewise, Google $12.9 billion in cold, hard cash, and another $73.4 billion that it can quickly sell for cash.

Let’s add some context

It’s one thing to throw around dollar amounts in the tens or hundreds of billions of dollars. It’s clearly a ton of cash. But how much cash is it, really?

Let’s start with Google and its $86.3 billion in cash. Here are some companies Google could buy outright in cash (using current market capitalization as the price for these companies):

  • Lowe’s ($72.8 billion)
  • Netflix ($68.8 billion)
  • Tesla ($53.8 billion)
  • Southwest Airline ($35.3 billion)
  • Harley Davidson ($9.8 billion)

Google could by any of these companies, straight up with cash. Apple could buy all of these companies, straight up with cash.

Apple could buy Proctor & Gamble ($219.9 billion), the massive consumer packaged goods company. P&G owns the Dawn, Tide, Gillette, Oral-B, and Crest brands, among many, many others. Apple doesn’t even need a loan to buy those folks.

What about some other technology companies? How do the stock piles at other companies compare to Apple’s $256.8 billion, or Google’s $86.3 billion?

  • Microsoft has $126.0 billion
  • Facebook has $29.4 billion
  • Amazon has $26.0 billion
  • Twitter has $3.9 billion
  • Netflix has $1.3 billion

Alright, so what about other huge companies that aren’t in the technology space? How do the cash balances stack up in these cases?

  • ExxonMobil has $3.7 billion
  • Johnson & Johnson has $41.9 billion
  • GE has $92.4 billion

We can see, then, that Apple and Google have historically large cash balances. Only a few companies can match their war chests. Two of these companies are Microsoft and GE.

Big cash balances do come with a cost

You might have heard of Carl Icahn‘s effort to get Tim Cook to return more of Apple’s cash to shareholders. The idea is that if Apple can’t use its huge cash cushion to productively invest in its own business, it should return that cash to shareholders, rather than simply padding its balance sheet.

The particulars of the argument can get complicated. The point is, when companies have the large cash positions that Apple and Google have, expect them to be the target of activist investors. The cash attracts activists. The large size of the business, on the other hand, keeps them away. Activists are less likely to effect transformative change at large companies like Apple and Google than they would at smaller companies.

Cash is one of those financial metrics that gets a lot of press. But it only tells one part of the story. That’s not surprising, since no single financial metric tells the whole story about any company. It’s a good idea to dive more deeply and put these kinds of numbers in context, before you start drawing conclusions and answering questions about the health of companies.

 

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