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Apple Inc.’s and Microsoft Corporation’s Cash Flow Indicator

The primary indicator of evaluating the company’s performance is traditionally profit. However, in addition to it, there are other indicators of the company’s performance, which can be used to assess its prospects. One of the leading indicators is the cash flow indicator, which is widely used in economics. The two companies Apple Inc. and Microsoft Corporation, are some of the most permanent examples of businesses with outstanding cash balances and investments. Cash flow is the most important indicator that reflects the company’s development prospects.

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The cash flow statement is a relatively recent addition to the set of financial reporting forms that companies provide to shareholders and other users. Its value allows getting information about the actual funds available to the company, which can often differ significantly from the figures indicated in the balance sheet and income statement (Klammer, 2018). The cash flow generated by the company’s core business “flows” into the investment sphere, where it can be used for the modernization of production or other investments that bring the company income. However, the same flow can go into the sphere of financial activity, where it will be used, for example, to pay dividends to shareholders.

Cash turnover in all countries is a minor part, but it is of great importance. This turnover serves the receipt and expenditure of most of the population’s funds. The cash-money turnover consists of a constantly recurring circulation of cash. Following the current procedure for the organization of cash turnover for each enterprise, limits are set on the balance of cash in their cash registers, and money exceeding the limit must be handed over to the commercial bank serving the enterprise.

Cash is essential to a company because it is an indicator that analysts pay particular attention to when they want to assess a company’s ability to stay afloat or take advantage of new business opportunities. Usually, operating activities provide positive cash flow, i.e., increase the company’s cash resources. In fact, for most American companies, cash receipts from day-to-day operations, even after deducting taxes, interest, and dividends, remain the primary source of their financing.

There are certain restrictions on the use of cash held by businesses. They consist primarily of setting a limit on the cash balance in the cash register. Besides, businesses can spend cash per their intended purpose. However, cash balances do not generate income. However, there is a significant risk of losses in the context of inflation due to the depreciation of money. All this increases the interest in reducing the cash balance.

A large amount of cash has a substantial impact on the company’s financial position. In such cases, investors turn to companies with much money on their balance sheets. The main disadvantage of a solid cash balance is that it can limit business growth (Harris & Roark, 2019). While a company needs to maintain liquid assets, the rest of the revenue can usually be more profitable. The money can be used to increase wages, expand the organization, or pay off debts. The cash balance is more reliable but does little to help the business grow until it can be used. Therefore, if cash is a permanent item on a company’s balance sheet, it may raise investors ‘ doubts about companies’ use of money.

Two companies with significant amounts of cash and liquid investments on their balance sheets are the well-known Apple Inc. and Microsoft Corporation (MSFT). Apple is one of the first companies that comes to mind when it comes to net balances. This corporation represents the most valuable company in the world. So. At the end of 2016, Apple had more than $ 216 billion in total cash and investments (Harnish & Collins, 2021). Apple’s current dividend yield is slightly above the technology sector average. Research suggests that Apple may have the world’s most loyal customer base, which tends to consume every iteration of its products (Li, 2020). This fact allows dividend investors to get rid of doubts when buying shares in such a fast-growing industry like technology. One of the advantages of the company is that it sells popular products. Apple is a widely appreciated company, and when a newcomer first encounters the stock market, this business is first chosen among the stocks. It is because the company produces not only popular gadgets but also special promotions.

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The second company, Microsoft Corporation (MSFT), is also popular among the planet’s entire population. It is one of the world’s largest software manufacturers, with billions in cash and short-term investments. MSFT has one of the world’s highest cash and investment metrics. The corporation’s current payout ratio is 52.5%, with an annual payout of $ 1.56 (Sehgal, 2020). More than half of the company’s revenue comes from the United States. In 2018, Microsoft took the position of the most valuable public company in the world (Sehgal, 2020). The company combines the growth rate characteristic of startups with the stability of a large, serious enterprise. These characteristics play in their favor because this combination attracts a large number of different investors to the stock.

Cash flow is the actual cash flow of the company, both in cash and deposited in accounts. It can be calculated both for the organization as a whole and for an individual investment project. The cash balance is reliable, but it does little to help the business grow until it can be used. The final value of this indicator can be either positive when the company has free funds or negative. In the second case, when adverse events occur, the business will experience difficulties with liquidity to get out of the situation.


Harnish, V., & Collins, J. (2021). The greatest business decisions of all time: How Apple, Ford, IBM, Zappos, and others made radical choices that changed the course of business. Fortune Books.

Harris, C., & Roark, S. (2019). Cash flow risk and capital structure decisions. Finance Research Letters, 29, 393-397.

Klammer, T. (2018). Statement of Cash Flows: Preparation, Presentation, and Use. John Wiley & Sons.

Li, B. (2020). Evaluation of Financial Risk in Apple Company. Technical University of Ostrava. Web.

Sehgal, G., Kee, D. M. H., Low, A. R., Chin, Y. S., Woo, E. M. Y., Lee, P. F., & Almutairi, F. (2020). Corporate social responsibility: A case study of Microsoft Corporation. Asia Pacific Journal of Management and Education, 3(1), 63-71.

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