Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Microsoft Corporation (MSFT): Higher Creditworthiness Than Apple Inc. (AAPL)?

Page 1 of 2

With nearly $145 billion in cash on the books, Apple Inc. (NASDAQ:AAPL) shouldn’t have problems paying bills any time soon. That’s particularly important considering the Mac maker’s recent announcement to tap the debt markets in order to fund its ambitious capital return program while leaving foreign cash untouched.

Any company seeking to raise debt capital will inevitably turn to the three major credit rating agencies for their respective seals of approval. S&P and Moody’s Corporation (NYSE:MCO) have assigned ratings, while Fitch has yet to publicly release a finalized rating. Here are the two ratings that Apple has officially earned thus far.

Rating Agency Apple Credit Rating Outlook
S&P AA+ Stable
Moody’s Aa1 Stable

Sources: S&P and Moody’s.

These are both below the credit ratings that longtime rival Microsoft Corporation (NASDAQ:MSFT) has fetched.

Rating Agency Microsoft Credit Rating Outlook
S&P AAA Stable
Moody’s Aaa Stable

Sources: S&P and Moody’s.

Microsoft earns the highest rankings from both, while Apple gets the second-best ratings. This is despite the fact that Apple has far more cash and Microsoft’s core PC business is under fire. Both companies have the majority of their cash positions locked away abroad.

Source: SEC filings. Cash and investments as of the end of March.

Microsoft Corporation (MSFT)It’s also worth pointing out that Microsoft Corporation (NASDAQ:MSFT)’s net cash position is lower because it already has $14.2 billion in long-term debt, of which $2.2 billion is current. As it turns out, both Microsoft and Apple Inc. (NASDAQ:AAPL) have recently filed prospectuses for upcoming debt offerings, which include each company’s calculations of certain credit-related metrics.

For example, the ratio of earnings to fixed charges helps credit investors assess how well profitability can cover fixed costs like interest expenses. Apple’s is soaring while Microsoft’s is dropping:

Source: SEC filings. Fiscal years ending June (Microsoft) and September (Apple) shown.

Page 1 of 2
Loading Comments...