AAPL — Apple Inc.

Will it survive?

• Can it pay its interest? 33.8×
  Comfortable
  Operating income $133.1B ÷ interest expense $3.9B

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient — it says solvent, not cheap.

• How heavy is the debt? 0.7×
  Conservative
  Total debt $90.7B ÷ operating income $133.1B

  Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.

• How long is cash tied up? -71d
  Negative — funded by others
  DSO 35 + DIO 9 − DPO 115 days

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”) — the company grows on other people's money.

Is it a good business?

• Return on invested capital 87%
  Exceptional
  NOPAT $112.3B ÷ invested capital $128.5B (debt + equity − cash)

  The rate the business earns on the money tied up in it — Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high — pair this with Owner Earnings.

• Owner Earnings (free cash) margin 24%
  Cash machine
  Owner Earnings $98.8B = operating cash $111.5B − capex $12.7B

  What an owner could take out without starving the business. That's 24% of revenue. Treating stock comp as the real expense it is (less $12.9B of SBC) leaves $85.9B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).

• Are earnings backed by cash? 1.00×
  Mostly cash-backed
  Cash from ops $111.5B ÷ net income $112.0B

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy — growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 105%
  Returns most of it
  Dividends + buybacks $103.3B ÷ Owner Earnings $98.8B

  Of $98.8B Owner Earnings, $103.3B (105%) went back to shareholders — $12.6B dividends, $90.7B buybacks. Net of $12.9B stock comp, the real buyback was about $77.8B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway — or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 1.09×
  Maintaining
  Capex $12.7B ÷ depreciation $11.7B

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth — or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency — or a melting asset base). The ratio won't tell you which; the filings will.

Durability — 2019–2025

A moat is high return that doesn’t fade. Here are the quality metrics across a full cycle — judge the consistency, not the latest dot.

• Return on invested capital ≥15% in 7 of 7 years
  87%
• Operating margin
  32%
• Owner Earnings margin
  24%