Question

How does apple Inc. make use of capital budgeting. No calculations are required. This section of the paper would be about one to two pages describing the process that the company would make use of for analyzing the capital budgeting situation.

Answer 1

Apple is a conglomerate company having a very low amount of debt capital in its overall books of accounts so it has a high flexibility while operating in the business and it is always able to have a competitive edge due to the capital structure it is having and this type of capital structure of a portion of equity not just help the business in taking care during adverse economic cycle but it will also help to exploit the adverse economic cycle.

Apple is a cash rich company and they have a high amount of cash in the hands and they are having that cash because they are able to generate a large amount of profit and they mostly do not have debt repayment structure to a large extent and the overall did capital is very manageable in the company so the company is trying to exploit this pandemic like situations and other economic adversities because they will be trying to borrow at lower rate of interest for longer period of time and they will be trying to repay those loans and because the loan are obtained at a lower rate of interest, this will possibly be added to the overall growth of the organisation.

Apple capital structure is a reflection of high degree of equity capital presence in the capital structure and very low degree of debt capital which is present in the capital structure so it is offering with a chance of maximization of the profits because the company does not have fixed expenses to a large extent and hence all the profits which are earned by the company are either being held or they are distributed