Even if it didn’t cut costs or sell a single iPhone.
From “Coronavirus Shows Cash Is King, Even for Biggest U.S. Companies” ($) in Thursday’s Wall Street Journal:
The fast-spreading coronavirus has prompted even the biggest U.S. companies to cut their spending and bolster their balance sheets, proving once again how cash is king, especially in times of crisis.
After a decadelong U.S. economic expansion, not every company has entered this crisis with the same cash cushion. Apple Inc. ended the year with $247 billion in cash, securities and account receivables, enough to run its operations for more than a year even if it didn’t cut costs or sell a single iPhone. Discount retailer Dollar General Corp. had $240 million, enough for about four days, in the unlikely event it had to shut its doors and didn’t cut any costs.
Technology companies generally operate with more cash on hand than retailers, which often have assets in unsold inventory. The median amount of cash and other readily available assets on an S&P 500 tech company’s books at year-end was enough to let it operate about 270 days in an extreme scenario without revenue or cost cutting, while the median was closer to 60 days for retailers, according to a Wall Street Journal analysis.
My take: Another benefit of its cash cushion is that Apple is not subject to the restrictions on stock buybacks that the COVID-19 relief package will impose on companies receiving aid.