Apple’s manufactures front product investments

Macworld Australia Staff
24 July, 2012
View more articles fromthe author

Apple’s financial achievements continue to grow with reports that because the company’s products are in such a high demand, Apple receives payment for its products before manufactures send the bill.

According to a Wall Street Journal report unlike most companies, Apple does not have to invest capital in order to manufacture its products for sale, rather “thanks to the efficiency with which Apple manages much of its balance sheet, the capital invested in its business is actually negative.”

“In other words, Apple gets paid for its products faster than it pays to make them” the WSJ report claims. Despite an “increased operating income [of] 84% in the year ending September 2011, capital employed fell.”

Apple’s suppliers instead put up the capital to make Apple’s products, as Apple pays its manufactures on average 83 days after being invoiced, while its customers pay their bill after 18 days on average.

“Contract manufacturers like China’s Foxconn make huge investments in fixed assets to make Apple products. Apple itself ends up running a much more ‘asset-light’ business,” WSJ reports.

Apple rose to 55 in Fortune’s Global 500 list from 111 in 2010, sporting an 85 percent increase in profits and 66 percent rise in revenue over the one-year period.

Apple is set to announce its quarterly earnings tomorrow morning (7am AEST), with mixed expectations from analysts over iPhone sales.



Leave a Comment

Please keep your comments friendly on the topic.

Contact us