E = Equity to Debt Ratio is Close to Zero
The debt to equity ratio is a measure of a company’s financial leverage. A high ratio generally represents that a company has been aggressive in financing its growth and operations with debt. While this may improve earnings in the short-term, too much debt can have disastrous effects in the longer-term.
Looking at Apple’s financials for its quarter ended September 29, 2012, it has a very strong debt to equity ratio of 0.49. This includes total liabilities and total stockholder equity. In comparison, Hewlett-Packard (NYSE:HPQ) and Amazon (NASDAQ:AMZN) have ratios of 3.76 and 2.02, respectively.
Furthermore, Apple’s total cash position of cash and equivalents, short-term investments and long-term investments equaled more than $121 billion at the end of its fiscal fourth quarter. This massive cash hoard is more than the entire market capitalization of Dell (NASDAQ:DELL), Hewlett-Packard, Research in Motion (NASDAQ:RIMM) and Facebook (NASDAQ:FB) combined.
T = Technicals on the Stock Chart are Mixed
Despite new products for the holiday season and a rock solid balance sheet, investors have been selling Apple like its going out of style. Shares hit as high as $705 in September, but briefly dipped below $500 in pre-market Monday trading. Shares made a rally to $590 in late November, but failed to break back above the 200-day moving average. This eventually led to a death-cross, with the 50-day moving average crossing below the 200-day moving average.
One caveat to Apple and the death-cross…