Apple Financial Analysis
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Company Analysis – Apple
TABLE OF CONTENTS
COMPANY OVERVIEW
Introduction
Brief History & Current Happenings
Apple Products & Services
Business Strategy
INDUSTRY ANALYSIS
SWOT Analysis
Industry Overview
FINANCIAL ANALYSIS
Short-Term Liquidity Analysis
Current ratio
Acid Test (or Quick Test Ratio)
Accounts Receivable Turnover
Inventory Turnover
Days in Sales Receivables
Days in Inventory
Days Purchases in Account Payable
Average Net Trade Cycle
Cash provided by operations to average current liabilities
CAPITAL STRUCTURE AND SOLVENCY RATIOS ANALYSIS
Long term debt to assets
Debt Ratio
Earnings to Fixed charges
Cash flow to fixed charges
Financial leverage index
Altman Z score
PROFIT MARGIN RATIOS ANALYSIS
Gross profit Margin
Net Profit Margin
Operating Profit Margin
RETURN ON INVESTMENT RATIOS ANALYSIS
Return on Assets
Return on Common Equity
Equity Growth Rate
Disaggregation of Return on Common Equity
ASSET UTILIZATION RATIOS ANALYSIS
Accounts Receivables Turnover
Inventory Utilization
Fixed Asset Turnover
Other Asset Turnover
Total Asset Turnover
FINAL RECOMMENDATION
BIBLIOGRAPHY
APPENDICES
Executive Summary
This report serves as an analysis of a leading company in the computer manufacturing industry. Apple is presently within the top five positions for being one of the top computer manufacturing companies in the world. Currently, it holds 5.8% of the market share and leads the market in fourth place. The company is making strides toward achieving success in the industry, more specifically in the consumer electronics market with the creation of the new iPhone.
In this report, Apples financials are analyzed for the years 2002 through 2006. These figures are compared to their main competitor, Hewlett Packard, which is the industrys top leader. In addition, also included in this report is an in-depth look at the computer manufacturing industry: trends, changes and innovations that are affecting Apple and its competitors.
With consolidation becoming the latest development in the computer manufacturing industry, competition to Apples 4th place position is intensifying. Apple hopes to become a larger entity and lessen the risks of a homogeneous product offering to consumers by diversifying its product lines.
By the end of this report, an insightful perspective on the financial performance of Apple and their future success or failure in their industry will have been provided.
Introduction
Apple is one of the largest suppliers of computers – holding 5.8% of the market. Although computers are still an important part of its product mix, music-related products are currently at the top of Apples playlist. The company scored a runaway hit with its digital music players (iPod) and online music store (iTunes).
Brief History and Current Happenings
Apple was founded on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. The first computer manufactured by Apple, Apple I, was hand-built by Steve Wozniak in the living room of Jobs parents home. It was sold as a mother board equipped with a CPU, RAM and basic textual-video chips.
On April 16, 1977, Apple II was introduced at the First West Coast Computer Faire. Despite a price higher than competitors, it quickly surpassed its two main rivals, the TRS-80 and Commodore PET, to become the market leader. Apples market advantage stemmed from its color graphics, high build quality and the introduction of a 5ј inch floppy disk drive and interface, Disk II.
By the end of the 1970s, Jobs and his partners had a staff of computer designers and a production line. The Apple II was succeeded by the Apple III in May 1980 as the company struggled to compete against IBM and Microsoft in the lucrative business and corporate computing market.
In the 1980s, IBM and Microsoft continued to gain market share at Apples expense in the personal computer industry. However, Apple was able to sustain its growth during this time because of its leadership in the education sector. The drive into education was accentuated in California with the donation of one Apple II and one Apple LOGO software package to each public school in the state.
In 1983, Apple introduced the first personal computer, the Lisa, to be sold