This results in Apple spending much less on capital expenditures as a percent of revenue. Instead of owning an extensive web of factories around the world, Apple invests in equipment and machinery located in other companies' factories.
Apple cash flow statement free#
While Apple brings in significant amounts of cash from hardware sales, the company's free cash flow generation receives a big boost from using contract manufacturers. Apple is a product company that relies on others to assemble its products. In addition, Apple's M&A strategy follows a similar protocol as management is very deliberate in its purchases, focusing on technology and people purchases capable of plugging holes in the asset base. The amount of money Apple spends on R&D as a percent of revenue is well below that of its peers. This intense level of focus extends all the way down to Apple's R&D efforts. Apple values the art of focusing, saying no to great ideas in order to concentrate the entire company on a few really great ideas. This motivation results in a much more unique product strategy than that of other companies. If Apple is able to make great products, management is confident that consumers will like the product and profit will follow. Apple doesn't design and sell products to drive revenue. However, Apple's financial performance backs up management's claim. While Apple executives use every opportunity to reiterate this point, most outside observers think it's just talk or PR. Management is motivated by coming up with great products, not making massive profits. Apple's superior cash generation begins all the way back in the R&D labs. There are three tenets, or beliefs, underpinning Apple's business model. The best way to begin dissecting the Apple cash machine is to take a closer look at Apple's business model. Apple's entire business model predisposes the company to superior free cash flow generation. IPhone is priced competitively with Samsung's flagship Galaxy smartphones.Īpple's product line shows that there is more than just pricing behind management's ability to extract profit from an industry. MacBook is priced competitively with laptops with similar specs. It may be easy to look at these products and conclude that Apple must be overcharging its customers. How else can Apple sell so many profit leaders? However:Īpple Watch and AirPods are underpriced versus the competition.
Even minor Apple products from a sales perspective, like Apple TV, are grabbing profit in an otherwise profitless industry. Apple is the most profitable wearables company.
Apple cash flow statement mac#
The best-selling laptop and desktop manufacturers can only dream of Mac margins. The most profitable pair of wireless headphonesįew hardware manufacturers make money selling smartphones and tablets. The money found in the components business doesn't come close to Apple-like profitability.
Apple cash flow statement full#
While the iPhone accounts for approximately 60 percent of Apple's revenue, the device doesn't tell the full story. Most of the discussions involving Apple's finances position the iPhone as being responsible for the company's good fortune. Not only is Apple generating significant operating cash flow, but the company is also kicking off free cash flow at rates not seen elsewhere in Silicon Valley - or the world for that matter. Free cash flow is a measure of how much cash is generated after taking into account capital expenditures and other costs associated with running the business. Apple's $51B of TTM free cash flow is $3B more than the free cash flow produced by Alphabet, Facebook, and Amazon combined. In what may come as a surprise, Apple is bringing in 70% more free cash flow than Microsoft, who is still considered to possess one for the more lucrative business models in existence. Apple is generating nearly as much cash as Amazon, Facebook, and Google combined. Google is generating as much cash as Amazon and Facebook put together. Apple's $64B of operating cash flow was nearly as much as that of Alphabet ($36B), Facebook ($19B), and Amazon ($17B) combined. In essence, Amazon is doing as well financially as Facebook. Turning to the cash flow statement, Apple's numbers are just as remarkable.
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