Apple ended its fiscal year on 26 September with $14.541 billion of inventories, 2.5 times the $5.718 billion of a year earlier, according to the balance sheet in the fourth-quarter financial statements it released on 2 November alongside the results we covered here. Measured against what Apple spent to make what it sold, that stock rose from 9.6 days of the quarter’s cost of sales to 22.2 days, by our arithmetic.
Over the same year, accounts payable, what Apple owes its suppliers, rose $12.392 billion to $82.252 billion, 1.4 times the $8.823 billion rise in inventories, our arithmetic. Vendor non-trade receivables, money Apple’s manufacturing vendors owe it for components, rose $6.716 billion. Taken together, the three lines absorbed $3.147 billion more than they supplied, by our arithmetic. The statements do not explain the inventory increase.
Short explainer · Apple Inventory Hit 22 Days of Costs
A vertical news Short summarising this story. Figures come from Apple’s financialstatements and 10-Qs; our arithmetic is labelled.
Business Pill · Lead Time
An evergreen Business Engineer explainer on lead times. It teaches the general idea only and does not discuss Apple’s inventories or results.
The key insight: By our arithmetic, Apple’s inventories went from 9.6 days of quarterly cost of sales to 22.2 days in a year, and while payables rose $12.392 billion, vendor non-trade receivables rose $6.716 billion, so the net credit between Apple and its supply chain covered 64% of the $8.823 billion build.
Update, 2 Nov: Ternus names carried inventory as a margin offset. Apple’s chief executive gave the first company comment we have seen that touches the inventory build. John Ternus told CNBC: “We saw higher memory costs as compared to the June quarter, and that was partly offset by the benefit of carrying inventory and lower costs on non-memory components.” He did not say, in CNBC’s report, how much inventory was involved or when it was bought. On the call Apple guided December-quarter revenue up 7% to 10%, CNBC reported; our piece on that outlook has the detail.
Apple’s balance sheets put inventories at $5.718 billion on 27 September 2025, $5.875 billion on 27 December, $6.747 billion on 28 March, $11.092 billion on 27 June and $14.541 billion on 26 September 2026. The increase was $4.345 billion from March to June and $3.449 billion from June to September, 88% of the year’s rise in two quarters, by our arithmetic.
Dividing each balance by that quarter’s total cost of sales and multiplying by 91 days gives 9.6, 7.2, 10.9, 18.5 and 22.2 days of inventory, our arithmetic. Total cost of sales was $54.125 billion in the September 2025 quarter and $59.657 billion in the September 2026 quarter, according to the statements, a 10% increase against 154% for inventories, our arithmetic.
Apple’s inventories, accounts payable and vendor non-trade receivables at five quarter ends, 27 September 2025 to 26 September 2026, indexed to the first = 100, with inventory days above the inventory line. Indexes and inventory days (inventories divided by that quarter’s total cost of sales, times 91) are our arithmetic from Apple’s balance sheets and incomestatements.Animated: Apple’s accounts payable divided by its inventories at five quarter ends, September 2025 to September 2026. The multiples are our arithmetic from Apple’s balance sheets; payables cover all purchases, not only inventory.
Components, Not Finished Goods
The 2 November statements do not split inventories. The 10-Q for the June quarter does: components were $7.645 billion on 27 June, against $2.124 billion on 27 September 2025, and finished goods were $3.447 billion, against $3.594 billion. Components rose 3.6 times while finished goods fell $147 million, by our arithmetic, and components went from 37% of inventories to 69%.
Whether that mix held at 26 September is not stated. Apple’s 10-K for fiscal 2026 had not been filed when we read the statements.
Who Is Financing the Build
Accounts payable were $69.860 billion, $70.587 billion, $57.349 billion, $64.525 billion and $82.252 billion at the five quarter ends. Payables are seasonal on these figures: they fell $13.238 billion in the March quarter and rose $17.727 billion in the September quarter, our arithmetic. Payables were 12.2 times inventories in September 2025 and 5.7 times in September 2026, by our arithmetic.
Payables also cover purchases that never become inventory, so they are not a direct measure of who paid for the build. Vendor non-trade receivables work in the other direction. Apple’s June-quarter 10-Q describes them as “non-trade receivables from certain of its manufacturing vendors resulting from the sale of components to these vendors who manufacture subassemblies or assemble final products for the Company”. It said two vendors accounted for 47% and 22% of the balance on 27 June.
That balance went from $33.180 billion to $39.896 billion over the year. Payables minus vendor non-trade receivables, a rough net of the credit flowing between Apple and its supply chain, rose from $36.680 billion to $42.356 billion. The $5.676 billion increase equals 64% of the inventory increase, by our arithmetic.
The cash flow statement for fiscal 2026 shows the same picture: inventories absorbed $8.905 billion, vendor non-trade receivables absorbed $6.716 billion and accounts payable supplied $12.171 billion. In fiscal 2025, inventories had released $1.400 billion. Apple generated $145.097 billion of operating cash flow in fiscal 2026, so the net working-capital use on these three lines, about $3.450 billion on the cash flow statement, equals 2.4% of it, our arithmetic.
What Apple Has Said About Components
Apple’s 10-Q for the March quarter, filed on 1 May, said: “The Company is experiencing a period of supply constraints and increasing costs for components driven by factors such as industry supply-demand imbalances for components, including advanced semiconductors, storage (NAND) and memory (DRAM)”, and that Apple “expects these trends to intensify”. The June-quarter 10-Q repeated both. Its 10-Q for the December quarter does not mention DRAM, NAND or supply constraints.
As we read it, the June 10-Q places the build in components rather than finished products: components rose from $2.124 billion to $7.645 billion while finished goods slipped to $3.447 billion. Apple has not said what those components are or why it holds more of them.
As we read it, the payables figure alone overstates the supplier financing: once vendor non-trade receivables are netted, the three working-capital lines absorbed $3.450 billion of cash in fiscal 2026 on the cash flow statement, 2.4% of operating cash flow, by our arithmetic.
Apple Inc., Form 10-Q for the quarter ended 28 March 2026
“The Company is experiencing a period of supply constraints and increasing costs for components driven by factors such as industry supply-demand imbalances for components, including advanced semiconductors, storage (NAND) and memory (DRAM).”
Three Implications
FOR COMPONENT SUPPLIERS Apple’s vendor non-trade receivables, money owed by the manufacturing vendors it sells components to, stood at $39.896 billion on 26 September, up from $33.180 billion a year earlier, according to its balance sheets.
FOR WORKING CAPITAL Inventories were 22.2 days of quarterly cost of sales on 26 September against 9.6 a year earlier, and payables covered inventories 5.7 times against 12.2, by our arithmetic.
FOR THE 10-K The fiscal 2026 10-K, not yet filed when we wrote, is the next filing that can show whether the components-versus-finished-goods split seen in June held at year end.
The framework puts it this way: “Memory is becoming the new compute.”
As we read it, Apple’s filings name memory (DRAM) among the components facing supply constraints and higher costs, but they do not tie that statement to the inventory build. The framework was published in December 2025, is about high-bandwidth memory for AI, and does not discuss Apple.
Apple’s June-quarter 10-Q restated the risk factor on components. In the fiscal 2025 10-K its heading read: “Future operating results depend upon the Company’s ability to obtain components in sufficient quantities on commercially reasonable terms.” In the June 10-Q it reads: “Future operating results depend upon the Company’s ability to obtain components and computing resources in sufficient quantities and on commercially reasonable terms.”
The restated factor runs to about 542 words against 279 in the 10-K, our count, and includes the sentence on supply constraints and memory (DRAM) quoted above. The 10-Q says that apart from the factors it sets out and those in the March 10-Q, there have been no material changes since the 10-K. The fiscal 2026 10-K had not been filed when we wrote.
Update, 2 Nov ~23:00 UTC: what the call said
In the prepared remarks of Apple’s earnings call, as transcribed by Six Colors, chief financial officer Kevan Parekh did not discuss the inventory balance or payables. On margins he said: “When you remove the tariff refunds from both the June and September quarter, both company and product’s gross margin would be down about one point sequentially, primarily driven by higher memory costs.”
For the December quarter, Parekh said: “We expect gross margin to be between 45 percent and 46 percent. This includes primarily the impact of higher memory costs, as well as some costs related to the ramp of Siri AI.” He also said iPhone revenue grew 17% and Mac revenue 24% year over year “despite supply constraints”.
The Six Colors transcript covers the prepared remarks only. The company comment on inventory we have seen is the one chief executive John Ternus gave CNBC, quoted in the update above; neither he nor Parekh gave an amount or a reason for the $14.541 billion balance in the material we read.
What Is Not Established
This piece is based on Apple’s fiscal 2026 fourth-quarter condensed consolidated financialstatements, released on 2 November, and its 10-Qs for the December, March and June quarters on SEC EDGAR. Indexes, multiples, inventory days, the payables-minus-receivables net and the shares are our arithmetic, not company statements. Inventory days use total cost of sales, which includes Services. Apple does not say why inventories rose, what the components are or whether any were bought ahead of price increases.
Its earnings call had not been transcribed when we first published, and the fiscal 2026 10-K had not been filed. We did not contact Apple.
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Apple held $14.541 billion of inventories on 26 September, 2.5 times a year earlier and 22.2 days of quarterly cost of sales against 9.6, by our arithmetic. Payables rose $12.392 billion, more than the $8.823 billion build, but vendor non-trade receivables rose $6.716 billion; net, the supply chain’s credit covered 64% of the increase, our arithmetic. The June 10-Q shows the build in components, and Apple has not said why it happened.
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A note on sourcing. Every company figure comes from Apple’s fiscal 2026 fourth-quarter condensed consolidated financialstatements, released on 2 November 2026, and its 10-Qs for the quarters ended 27 December 2025, 28 March 2026 and 27 June 2026, read on SEC EDGAR on 2 November. Indexes, inventory days, multiples, shares and the payables-minus-receivables net are our arithmetic. We did not contact Apple.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
