Apple (AAPL) has $97 billion in cash, piling up a whopping $93 billion in just 9 years as the company swaps iProducts for green backs. It practically prints the stuff.
Apple's not quite as fast as the government: The U.S. Bureau of Engraving and Printing creates that much money in about 6 months. Still, Apple's a close second to Uncle Sam. (If you compare Apple's expected revenue for the upcoming year to U.S. printing presses, Apple might actually come in first.)
In other words, Apple's a mean efficient cash machine.
While Apple makes its money in the conventional way -- contracting with others to make its products, selling the goods, receiving cash and paying off its creditors -- the speed involved is anything but conventional.
Apple literally makes money in "negative time."
In retail, the cash cycle measures how efficiently companies manage their sales, inventories, and bills. Apple's handling of its cash cycle is remarkable: Cash is locked-up in inventory and receivables for less than half the time it takes to pay its creditors.
When you figure the number of days Apple ties up its cash in inventory and sales minus the days it takes to pay its bills, the company actually has a -54 day cash cycle. In effect, Apple's cash sits in its inventory and outstanding sales for a shorter period than it takes to pay its creditors. Result: An efficiency unparalleled in retail.
For those interested in the minutia of the cash cycle (and love equations):
Cash cycle (CCC) = days sales outstanding (DSO) + days inventory outstanding (DIO) - days payable outstanding (DPO).
Apple's Cash Cycle Management Crushes Its Rivals
How do Apple's competitors -- Hewlett-Packard (HPQ), Research in Motion (RIMM), Nokia (NOK), HTC, Asustek, and Dell (DELL) stack up? Remember, the cash cycle measures the time difference between disbursing cash and collecting cash. The shorter the number of days, the better!
(data courtesy of Morningstar.com, TTM time period)
Apple leads the pack. Research in Motion trails, taking a very long 64 days for a dollar to go through its cash cycle.
The bottom line:
During the last year, share prices have performed eerily close to the companies' cash cycle.
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