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