From the course: Corporate Financial Statement Analysis
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Example: Comparing tech company debt ratios
From the course: Corporate Financial Statement Analysis
Example: Comparing tech company debt ratios
- Now let's take a look at some different debt ratios and how they can be applied. We're going to illustrate using the tech sector, four companies with which we are all familiar, Microsoft, Google, Apple and Amazon, the big four. Here is some information from each company's balance sheet. Now there's a lot of information here because we're going to make a lot of points. First of all, notice that for Google, Microsoft and Apple, from 40 to 60% of their assets consist of investment securities. For Apple for example, they have over 200 billion dollars in investment securities. That's money that they've invested in other companies. Now the reason I point this out is that you can also see that Apple has 93 billion dollars in long term debt. They've gone to a bank and borrowed almost 100 billion dollars. Why did they do that with all these investment securities? Why not just cash those securities in instead of borrowing money? Well, that's a discussion for another day but let me just hit…
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