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Friday, 29 July 2011

All the news we can make up

The BBC website currently carries a headline "Apple holding more cash than USA"

They go on :
Apple now has more cash to spend than the United States government. Latest figures from the US Treasury Department show that the country has an operating cash balance of $73.7bn (£45.3bn). Apple's most recent financial results put its reserves at $76.4bn (£46.9bn).

Yes, that's right.  Apple has reserves of £46.9 bn, not cash.  Total reserves are an accounting estimate of the amount available to shareholders on a winding up assuming that all assets could be sold at their book value and all liabilities could be settled at par without penalty, where as cash is actual liquid holdings available now.  Apple only has £8 billion cash.  It has other short term instruments, but it isn't going to get its hands on anything like that amount of cash unless it winds up its entire business.

On the other hand US government could raise.some extra cash by selling a few assets, but that is neither here nor there.

The truth is that the BBC is wrong because it is too stupid to find out the facts and in any event it has no interest in honest reporting, only in making up stories.


Demetrius said...

When they put Zaphod Beeblebrox in charge what did you expect? Reality?

Not a sheep said...

I complained about their article and received this response:
'Dear Sir,

Cash is shorthand for cash and/or easily liqidable assets - pretty common business parlance.

"With more than $75bn either sitting in the bank or in easily accessible assets, there has been enormous speculation about what the company will do with the money."'

Somehow I don't think it answers the complaint, do you?

Alex said...

"Cash" is a defined term in accounting and the Apple accounts show $12 billion of cash.

The Apple accounts show other current assets, generally credit sales to vendors, but they also show current liabilities, mostly payments to suppliers.

They also show substantial amounts of securities, but securities are not cash. You can't pay wages in government securities.

Sure, Apple could sell al their securities (and watch the price move against them as they tried to unload $70 billion), but does the BBC think the government does not also own vast tracts of land, plant and machinery and other assets that it could not sell? Without borrowing a dime the US government could raise cash by selling: Amtrak, the U.S. Postal Service, the air traffic control system, the nationalised airports, the nationalised seaports, federally owned electricity utilities, federally hydroelectric dams and billions of dollars worth of excess buildings, land, and inventory.

But the fact is they haven't, but the fact is that Apple has $12 bn of cash while the US government had 6 times as much.

Not a sheep said...

I had already composed a response to the BBC's inadequate answer but I have now included your points as well. I have sent it but doubt that I will receive as prompt a reply this time...

Not a sheep said...

The BBC have replied, very briefly:
'Please see link below:


BBC News website'

I have responded:
'So you agree that your article should have said 'Cash and cash equivalents' not 'cash'.

Does the US government have any 'cash equivalents' to add to their 'Cash' figure?

Are you really comparing like with like?'

Am I right or wrong?

Alex said...

The US government probably doesn't hold much in the way of "cash equivalents", but Apple only holds $16 billion, which if added to their cat of $12 billion gives only $28 billion which even though it isn't cash is still one third of the value of cash held by the US government at the time of the report.

Apple holds other longer dated marketable securities but those are never treated as cash equivalents or cash.