A company has more cash than assets when they manage their cash well, debt reduces net assets. For instance, when a company accounts receivable are smaller by about $300 MM than their accounts payable, it uses its suppliers cash. AAPL is such a company, with more than $11/share in cash and cash equivalent (I hope they did not classify their investments in "cash equivalents") and only $9 or so in book value, and guess what, a dollar of that difference is accts payable, I could not find the other buck, but I did not look hard enough (g). The reason for the riddle, is that in the current environment, a strong balance sheet is a cushion to further declines, and if the market turns, you could easily make 30% to 40% on it without the risks associated with for instance JDSU (selling at close to book, but, unfortunately, close to 80% of book is "thin air" or goodwill.
Zeev |
