Apple holds huge cash of 30 trillion yen



Apple announced plans to contribute 350 billion dollars (about 39 trillion yen) to the American economy by investing in the United States. Although Apple is expected to pay approximately 4 trillion yen to the United States by returning to the US the profits that he was trying to overseas, why Apple holds a large amount of cash so much as Ashoron analyst Horace Mr. Dedew explains.

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http://www.asymco.com/2018/01/18/the-apple-cash-faq/

Apple announced that it would return the profits accumulated overseas over the next five years to the US.

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https://www.apple.com/newsroom/2018/01/apple-accelerates-us-investment-and-job-creation/


A series of investments in the United States included hiring 20,000 people in the US, employment alone brought about $ 5 billion (about 560 billion yen) economic benefits and combined all The economic effect will go up to 350 billion dollars (about 39 trillion yen). It was also revealed that the basic resource of investment in the United States is the staying funds that had been saved abroad and that the tax imposed on returning profits to the home country is $ 38 billion (about 4.2 trillion yen) It is.

President Trump, who pledges America First and pledges to rebuild the American economy such as employment creation, welcomes Apple's policy.


Within Apple's release, Tim Cook says that he feels "responsible for contributing to the United States", but of course it does not simply return funds to the United States from responsibility. It is no doubt that Apple judged to have economical rationality by returning funds to the United States who was well offshore-based tax savings.


According to Mr. Dedew, "cash" held by Apple as of the end of September 2017 and "investment" on the balance sheet is $ 268.895 billion (about 30 trillion yen). Short-term and long-term securities are included in 30 trillion yen. Strictly speaking, since cash is a current asset and securities have low liquidity, long-term securities are not treated as cash in accounting, but the securities held by Apple are excellent Considering that it can be regarded as "cash", Apple can roughly estimate it to have cash (cash) of 30 trillion yen.

Among the 30 trillion yen cash held by Apple, there are only US $ 17 billion (about 1.9 trillion yen) in the US, all other countries are owned. Since Apple sells hardware such as iPhone and software such as App Store all over the world, it also naturally benefits outside the United States. However, if Apple tries to take all the profits back to the United States, it will incur significant tax payment obligations. In the US taxation system, taxes were imposed on returning profits raised abroad to the US, and the tax rate was about 30%.

If Apple tried to return a large amount of cash stored in abroad to the United States, it will be reduced by 30% by being taxed, which is not acceptable from shareholders holding the company, and if executed Deweyu said that it would be brought in a shareholder representative case to seek management's legal responsibility.

Byallen

In the trump regime advocating the United States First, a policy was drafted that greatly reduces the tax rate in the case of refunding funds that American companies have evacuated abroad to the United States. And, due to the establishment of the Tax Reform Law in December 2017, since a preferential taxation system appears that reduces the taxation of returning home to 15% only once, Apple decided to return overseas interests to the home country of the United States That is why.

Furthermore, Dedew said that accumulation of cash is not only good for companies. "Cash" is just a measure of past success, investors are interested in the future value, the ability to generate future profits is emphasized. And shareholders ask cash to make greater profits. Apple gets more pressure from investors that as more cash it owns, the more it should be used to make better use of it.

Among Apple's business models, it requires a lot of money to manufacture hardware, data centers and Apple stores, but it does not require much money for research and development and sales. For Apple that is likely to stay cash due to outstanding earnings structure, investment in M ​​& A may be considered as effective use of cash, but Mr. De Dieu said Apple has its own strong corporate culture, Considering the risk of dilution, we point out that there are many demerits.

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