How to Read a Balance Sheet: A Line-by-Line Walk Through Apple's 10-K
A balance sheet is a snapshot of what a company owns, what it owes, and what is left over for its shareholders on one specific day. Most guides explain it with a made-up lemonade stand. This one uses a real filing: Apple's annual report (Form 10-K) for the fiscal year that ended September 27, 2025, filed with the SEC on October 31, 2025. Every number below comes from that filing, so you can open it and follow along.
The Short Answer
- Assets are what the company owns or is owed: cash, investments, money customers owe it, inventory, buildings and equipment.
- Liabilities are what it owes: bills to suppliers, debt, taxes and other obligations.
- Shareholders' equity is assets minus liabilities, the owners' accounting claim on the business.
- Current means due or usable within a year; non-current means longer.
- Read it in this order: is there enough short-term money to cover short-term bills, how much debt is there compared with equity, and what changed since last year.
The One Equation Behind Every Balance Sheet
Assets = Liabilities + Shareholders' Equity. It always balances, because every dollar a company holds came either from someone it owes (a lender, a supplier) or from its owners (money they put in plus profits the company kept).
Apple's numbers on September 27, 2025, in billions of dollars:
$359.241 total assets = $285.508 total liabilities + $73.733 shareholders' equity
Add the two right-hand numbers and you get exactly the left-hand one. If a balance sheet you are reading does not tie out like this, you have copied a number wrong.
Apple's Balance Sheet, Line by Line
This is Apple's consolidated balance sheet as filed, with the prior year beside it. Comparing the two columns is half the job: a balance sheet on its own tells you where the company stands, the change tells you which way it is moving.
| Line item ($ billions) | Sept 27, 2025 | Sept 28, 2024 |
|---|---|---|
| Current assets | ||
| Cash and cash equivalents | 35.934 | 29.943 |
| Current marketable securities | 18.763 | 35.228 |
| Accounts receivable, net | 39.777 | 33.410 |
| Vendor non-trade receivables | 33.180 | 32.833 |
| Inventories | 5.718 | 7.286 |
| Other current assets | 14.585 | 14.287 |
| Total current assets | 147.957 | 152.987 |
| Non-current assets | ||
| Non-current marketable securities | 77.723 | 91.479 |
| Property, plant and equipment, net | 49.834 | 45.680 |
| Other non-current assets | 83.727 | 74.834 |
| Total non-current assets | 211.284 | 211.993 |
| Total assets | 359.241 | 364.980 |
| Current liabilities | ||
| Accounts payable | 69.860 | 68.960 |
| Other current liabilities | 66.387 | 78.304 |
| Deferred revenue | 9.055 | 8.249 |
| Commercial paper | 7.979 | 9.967 |
| Term debt due within a year | 12.350 | 10.912 |
| Total current liabilities | 165.631 | 176.392 |
| Non-current liabilities | ||
| Term debt | 78.328 | 85.750 |
| Other non-current liabilities | 41.549 | 45.888 |
| Total non-current liabilities | 119.877 | 131.638 |
| Total liabilities | 285.508 | 308.030 |
| Shareholders' equity | ||
| Common stock and additional paid-in capital | 93.568 | 83.276 |
| Accumulated deficit | (14.264) | (19.154) |
| Accumulated other comprehensive loss | (5.571) | (7.172) |
| Total shareholders' equity | 73.733 | 56.950 |
| Total liabilities and shareholders' equity | 359.241 | 364.980 |
Reading the Assets
Assets are listed roughly from most liquid (closest to cash) to least.
- Cash and cash equivalents ($35.9 billion): money in the bank and very short-term investments.
- Marketable securities ($18.8 billion current, $77.7 billion non-current): bonds and other investments Apple holds. The split depends on when they mature, not on how easy they are to sell. That matters later, because $77.7 billion of sellable investments sits outside "current assets".
- Accounts receivable ($39.8 billion): money customers, much of it cellular carriers and other resellers, owe Apple for products already delivered.
- Vendor non-trade receivables ($33.2 billion): money owed to Apple by the manufacturers that build its products, mostly for components Apple sold them. Most companies do not have a line like this; it is a good example of why you read the company's own labels instead of assuming.
- Inventories ($5.7 billion): finished products and parts not yet sold. Small for a company with Apple's sales, because its suppliers hold most of the work in progress.
- Property, plant and equipment, net ($49.8 billion): buildings, data centers and equipment, minus the depreciation charged so far.
Reading the Liabilities
- Accounts payable ($69.9 billion): bills owed to suppliers. Apple owes its suppliers more than its customers owe Apple, which means suppliers are partly financing its operations.
- Deferred revenue ($9.1 billion): money received for things not yet delivered, such as service subscriptions and support. It is a liability because Apple still owes the service.
- Commercial paper ($8.0 billion): short-term borrowing, usually repaid within months.
- Term debt ($12.4 billion due within a year, $78.3 billion later): bonds Apple has issued. Add commercial paper and both term-debt lines to get total debt: $98.7 billion.
- Other liabilities lump together items such as taxes owed and accrued expenses; the notes to the financial statements break them down.
Reading Shareholders' Equity
Equity is what is left for shareholders on paper. Apple's has two surprises for a first-time reader.
- It is small next to the company's size. $73.7 billion of equity against $359.2 billion of assets. In fiscal 2025 alone Apple repurchased $90.1 billion of its own stock and declared $15.4 billion of dividends, according to its statement of shareholders' equity, and both reduce equity.
- Retained earnings are negative (shown as an accumulated deficit of $14.3 billion), even though Apple earned $112.0 billion of net income in fiscal 2025. Apple charges buybacks and dividends against this line. In fiscal 2025 it started at minus $19.2 billion, rose by $112.0 billion of profit, and fell by $90.1 billion of repurchases, $15.4 billion of dividends and $1.7 billion of shares withheld for employees' taxes, ending at minus $14.3 billion. A negative number here is not automatically a sign of losses: check the income statement before drawing that conclusion.
The lesson is broader than Apple: book equity is an accounting figure, not a market value. It records what owners put in and what the company kept, at historical cost. The stock market valued Apple at far more than $73.7 billion, because the brand, the software and the customer base are worth much more than the balance sheet can record.
Four Ratios Worked Out From the Real Numbers
Ratios turn the raw lines into answers you can compare across companies and years. All four below use Apple's September 27, 2025 figures.
| Ratio | Formula | Apple, fiscal 2025 | What it asks |
|---|---|---|---|
| Current ratio | Current assets ÷ current liabilities | 147.957 ÷ 165.631 = 0.89 | Can short-term assets pay short-term bills? |
| Quick ratio | (Cash + current marketable securities + receivables) ÷ current liabilities | 127.654 ÷ 165.631 = 0.77 | Same question, without inventory and other slower assets |
| Debt-to-equity | Total debt ÷ shareholders' equity | 98.657 ÷ 73.733 = 1.34 | How much is financed by borrowing versus owners? |
| Return on equity | Net income ÷ average equity | 112.010 ÷ 65.342 = 171% | How much profit per dollar of book equity? |
How to read these for Apple. A current ratio below 1 is often taught as a warning sign, and for many companies it is. Here it mostly reflects where Apple parks its investments: the $77.7 billion of non-current marketable securities can be sold, but they do not count as current. Cash plus all marketable securities is $132.4 billion, which is $33.8 billion more than total debt. The 171% return on equity is high mainly because buybacks have shrunk the equity base, not only because profits are large. Each ratio means little alone; compare it with the same company's past years and with similar companies.
What a Balance Sheet Cannot Tell You
- Whether the business is profitable. That is the income statement.
- Whether it actually generates cash. That is the cash flow statement. A company can show profits and still run short of cash.
- What happened between the two dates. It is one day's snapshot. A company can borrow the day after year-end.
- What the stock is worth. Book value and market value often differ widely, as Apple shows.
Read all three statements together, plus the notes, which explain the big lines. Our fundamental analysis guide covers how they fit together.
How to Find Any Company's Balance Sheet
Every U.S.-listed company files its financial statements with the SEC, and they are free on EDGAR.
- Go to sec.gov/edgar/search and type the company name or ticker.
- Filter the filings to 10-K for the annual report, or 10-Q for the quarterly reports.
- Open the main document and jump to Item 8, Financial Statements and Supplementary Data. The balance sheet sits next to the income statement and cash flow statement.
- Note the date at the top and the units (thousands or millions); companies differ.
A 10-K's balance sheet has been audited by an independent accounting firm. A 10-Q's has not, so treat quarterly figures as slightly less settled.
Red Flags Worth a Second Look
- Receivables growing much faster than sales: customers may be slow to pay, or sales may be booked too early.
- Inventory piling up faster than sales: products may not be selling.
- Debt rising every year while cash falls: the company may be borrowing to cover operations.
- Large goodwill: the premium paid for acquisitions. It can be written down suddenly if a deal disappoints.
- Negative equity: sometimes from buybacks (as with several large, profitable companies), sometimes from years of losses. The income and cash flow statements tell you which.
None of these proves a problem. Each is a reason to read the notes and the management discussion in the same filing.
FAQ
What are the three main parts of a balance sheet?
Assets, liabilities and shareholders' equity. Assets always equal liabilities plus equity.
What is the difference between current and non-current?
Current assets are expected to turn into cash within a year, and current liabilities are due within a year. Everything else is non-current.
Is a current ratio below 1 bad?
Often it is a warning sign, but not always. Apple's was 0.89 for fiscal 2025 while it held $132.4 billion in cash and marketable securities, most of it classed as non-current. Look at what sits outside current assets before deciding.
Why can a profitable company have negative retained earnings?
Because buybacks and dividends can be charged against retained earnings. Apple reported a $14.3 billion accumulated deficit at the end of fiscal 2025 despite $112.0 billion of net income that year.
Where can I find a company's balance sheet for free?
In its 10-K (annual) or 10-Q (quarterly) filing on SEC EDGAR, under Item 8 in the annual report. Company investor-relations sites usually link to the same filings.
What is book value per share?
Shareholders' equity divided by shares outstanding. It is an accounting figure and is often far below the share price for companies whose value lies in brands, software or people.
Educational content, not investment advice or a recommendation to buy or sell Apple or any other security. Figures are from the company's filing as stated; ratios are our own arithmetic.
