Apple Inc. (NASDAQ:AAPL) has apparently more cash on its balance sheet than the United States government, says a report from TheRegister. According to the report, though hard to believe, the company has three times more cash than the U.S. government and twice that of the UK government.
Apple has more cash than the U.S. and UK government
Bank of America’s wealth-management arm, US Trust, reported that Apple Inc. (NASDAQ:AAPL) has $160 billion in cash compared to $49 billion of the government. In a recent SEC filing, Apple Inc. (NASDAQ:AAPL) reported that it has $158.8 billion in cash and cash equivalents in addition to short and long term securities.
A decade ago, no one talked about tail risk hedge funds, which were a minuscule niche of the market. However, today many large investors, including pension funds and other institutions, have mandates that require the inclusion of tail risk protection. In a recent interview with ValueWalk, Kris Sidial of tail risk fund Ambrus Group, a Read More
However, a report from Forbes by Tim Worstall says that, in reality, “companies are not as rich as the government due to some obvious reasons” such as the fact that the government has (sort of) an unlimited amount of cash because they are the one who create it. They can print the paper notes or just create new electronic money. This makes really difficult to figure out how much cash the government has and how much more they can print.
Accounting not an easy job
Another reason why these figures do not hold any genuineness is that companies do not keep their money much in the form of cash. They either invest it in the short term securities or buy commercial papers. These numbers are not cash, but cash and cash related items. Also, short-term treasuries “do count as being pretty much cash, or “near cash” in the jargon, for such reporting purposes,” says the author.
In that sense, the United States government does not hold any cash at all as it has borrowed hundreds of billions in the form of short term treasuries, and this amount is larger than the amount of cash reported. If the treasuries owned by Apple Inc. (NASDAQ:AAPL) are treated as cash then treasuries owned by United States will be negative cash. This will be because the same accounting principles will be followed for every asset.
It turns out that there can be no clear theory over cash numbers. It all depends how the standards are assumed to conclude Apple Inc. (NASDAQ:AAPL) have more cash than the US government or the United States government has unlimited, amount of cash or has a negative amount of it.