Apple Cashes In On Cash

By any account, the performance of Apple's stock has been fantastic in recent years and at least part of that performance can be traced back to its management of fixed assets and net working capital. Apple manufactures nothing, but instead contracts out production of iPhones, iPads, and Macs to someone else. These manufacturers are then forced to make large capital investments necessary for production, reducing Apple's need for fixed assets. And many of these suppliers produce products only for Apple, meaning that Apple has leverage in negotiations with its suppliers. Apple pays it payables 83 days on average after receiving the invoice. On the receivables side, Apple collects in 18 days on average and has just 4 days of inventory on hand. As a result, Apple's cash conversion cycle is an incredible negative 61 days!