Apple Has 10% Of All Corporate Cash? Not Really

WSJ: Apple Now Holds 10% of All Corporate Cash: Moody’s

QZ: Apple is sitting on 10% of all US corporate cash

Reality: Apple’s foreign and domestic cash reserves, if taken in aggregate, constitute around 10 percent of U.S. corporate cash, if you discount financial corporations. So if you take all the cash reserves of an international company that happens to be headquartered in the United States, call it a U.S. company, ignore the most cash-rich genre of all U.S. corporations, and compare the Apple tally to the artificially constrained aggregate, it has around 10 percent of corporate cash.

That’s far less impressive than the Wall Street Journal’s headline, and a firm discount on QZ’s. But we’re being a bit pedantic. Let’s take a look at Apple’s bank stash.

An internal document dated May 21, 2013 detailing how Apple arranges its affairs to avoid paying taxes – a perfectly legal and expected endeavor – indicates that the company had $145 billion in cash, of which $102 billion, or 70 percent, was foreign.

That’s to say that Apple the international conglomerate has $102 billion in cash, equivalents, and marketable securities abroad from its titular home country of the United States. Cash is not mobile across certain borders. If Apple wanted to bring that money “home” it would pay a stiff corporate tax rate. So, most of its cash is essentially exiled in perpetuity.

To count it as cash that sits under the jurisdiction of a company that we can deem a U.S. firm is to therefore bend the definition of what is reasonable.

Apple’s domestic cash is around $43 billion (May data is the best that we have here regarding the foreign/domestic split). The Wall Street Journal reported that, according to Moody’s, aggregate U.S. corporate cash totals $1.48 trillion. Apple domestic cash is therefore around 3 percent of that figure. That’s less impressive.

But we are in a further muddle here, as we are comparing domestic cash of one company to aggregate cash of others. And, we are still dealing with cash of non-financial corporations (not all), so we are too far down the rabbit hole to see light.

Apple remains immensely wealthy. Today, however, activist investor Carl Icahn announced that he is pressing the company to add $90 billion to its share repurchase program, which would strain Apple’s cash position.

The proper way to compare corporate cash would be to find breakdowns for the 1,000 firms that Moody’s rates (those are the firms from which it created the $1.48 trillion figure, I believe) and compare domestic cash to domestic cash and foreign to foreign. That’s provided you wanted to compare the subset of global corporations that call the United States home.

It would be far more interesting again to compare all wealthy global corporations and their aggregate cash position. Have fun.

Top Image Credit: Steve Snodgrass