A balance sheet is a list of what a company owns and what it owes on one day. The P&L covers a period. The balance sheet is a photograph.
A balance sheet is a list of what a company owns and what it owes on one day. The P&L covers a period. The balance sheet is a photograph.
It has three parts. Assets are what the company owns. Liabilities are what it owes. Equity is the difference. Assets always equal liabilities plus equity. That's why it's called a balance sheet.
Each side is split by time. Current means it turns into cash or falls due within a year. Non-current means later than that.
That split is why a balance sheet can be read in a minute. Set the two current columns against each other and you have the question that matters in the short run. Can the company cover what falls due this year out of what it already holds? The non-current side is a slower story. A factory earns over decades. A bond maturing in 2033 changes nothing about next month.
Apple's balance sheet on September 30 2023. In millions. The current assets in full and the totals.
Check the balance. $290,437 million plus $62,146 million is $352,583 million. It balances.
Read the current assets. Cash is $30 billion. Marketable securities is another $32 billion that could be cash next week. Accounts receivable is money customers owe Apple. Inventory is only $6 billion. Apple holds a few days of product and no more.
Those three totals hide the same split on the other side. Apple's current liabilities on that date were $145,308 million.
Derived. Non-current assets are $352,583 million minus $143,566 million. $209,017 million. Non-current liabilities are $290,437 million minus $145,308 million. $145,129 million.
| Split | Current ($M) | Non-current ($M) |
|---|---|---|
| Assets | 143,566 | 209,017 |
| Liabilities | 145,308 | 145,129 |
Now the two current figures sit side by side. $143,566 million of current assets against $145,308 million of current liabilities. Apple owed slightly more inside the year than it held inside the year. Whether that matters is tomorrow's class.
The trap is reading equity as the company's value.
Equity is what's left after liabilities. It's an accounting number. Apple's equity was $62 billion on that day. Apple's market value was in the trillions. The gap is everything the balance sheet doesn't list. The brand. The customers. The next product.
Equity tells you what the accountants can count. It doesn't tell you what the company is worth. That's day 3 of Intro to Corporate Finance.
You're a new analyst. Your manager hands you Apple's current assets without the total and asks for it.
Add the six lines.
$29,965 million plus $31,590 million plus $29,508 million plus $31,477 million plus $6,331 million plus $14,695 million.
Write the total.
$143,566 million.
Your manager asks how much of that is cash or nearly cash.
Cash $29,965 million plus marketable securities $31,590 million is $61,555 million. About 43% of current assets.
She asks whether Apple could pay off everything it owes this year from that.
Not from cash alone. Current liabilities were $145,308 million. That's tomorrow's class.
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