In May 2017, Apple Inc. notified the Securities & Exchange Commission (SEC) that

Question

In May 2017, Apple Inc. notified the Securities & Exchange Commission (SEC) that it would be issuing another $7 billion in bonds during 2017. Apple previously issued $10 billion in bonds in February 2017 in the US and $1 billion in Taiwan. Apple plans to buy back its own stock with the proceeds from the bond issue. Answer the following questions: 1. What are the effects of this most recent bond issue on Apple's balance sheet? 2. Will any other parties be affected by this most recent bond issue? If so, who will be affected and what are the potential effects? 3. Besides issuing bonds, what other ways could Apple use to raise the funds needed to buy back its own stock?

Explanation / Answer

1. If Apple Inc. issue Bonds in May 2017, the Debt of the company will increases and Debt Equity Ratio of the ratio will increases. Company have a fixed obligation of interest on Bonds if it will issue Bonds but there is an increase in the Capital Employed in the business.

2. Equity Shareholders, Bankers, Existing Bond Holders risk will increase. The expectation of Equity Shareholders will also increase.

3. Apple Inc. can use Internal Cash Accruals if Company has excess Cash in hand, Company can approach the Bankers and existing Lenders if they offer the same amount at lesser interest rate than Bonds Coupon rate.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.