Paste your essay in here…Apple Inc. founded by Steve Jobs, Steve Wozniak and Ronald Wayne is the world’s largest information technology company in terms of revenue generated and the third highest mobile phone manufacturer. It is estimated that the annual revenue for the 2017 fiscal year is around $229 billion. This can be attributed mainly due to brand loyalty among its customers who have enjoyed high-quality products ever since the company’s inception. The most popular devices of Apple being the iPhone, iPad and MacBook have consistently been in the top tier products in their domain of devices. The iPhone itself has seen eleven generations of models since the initial version with its corresponding software being updated every year. It can easily be inferred that it is the biggest and most valuable device Apple or any other Information technology company has ever created in terms of global sales and revenue. This paper shall provide a detailed report on the financial analysis on Apple Inc. detailing about the main assets, liabilities, income statements, cash flow statements, costs of goods, cost of raw materials and inventory currently and previously. The aim of this is to determine if the company has been in a profitable state or not over the years and if it is, then, by how much in order to evaluate it.
Apple is currently the world’s largest company based on its assets estimated to be at over a Hundred and ninety-four thousand evaluated at $375 billion approximately. However, the no of assets of the company seems to have decreased to 54.96% since the previous year when it was 62.24%. The assets we calculated were cumulative of the current assets which changed by 19.59% and also the non-current assets which changed by 69%. This can be seen as the company trying to lose some of its old ventures and experimenting with new possibilities due to its loss of capital.
The current liabilities of the company seem to have reduced from the previous year by a margin of 1.99% indicating that the company has settled all its obligations well within their time thus indicating a successful earning period. The stockholder’s equity has increased by a margin of 10.79% from last year indicating the brand loyalty and increased no of believers in the company’s value. This could be due to highly successful iPhone 7 which saw a highly exponential sales growth once in the market. Considering the liabilities and stockholder’s equity together, the value seems to have increased cumulatively by a margin of 8.01%. The company seems to have been pulling hard strings everywhere to achieve such an improvement.
The sales no of products, however, tells us a different story as it can be seen that the no has gone down by 7.73%. This can be directed to a potential decline in product sales which contradicts the other values. This can also be inferred to as a potential increase in sales products from other rival IT companies like Samsung, Microsoft or Google. One interesting number that appears to be is the cost of goods sold which has seen a decrease by 6.22% which indicates that the products have been considerably cheaper than what would have been estimated initially based off of previous year product pricing. This can be seen as the company’s initiative to reduce the pricing in order to increase its customer base, by making it available to more people who couldn’t afford it before. The operating expenses of the current year have decreased greatly compared to the previous year by a margin of more than 15%. This might indicate things like smart investments by the company and it also lines up with the reduced no of sales. The operating income has increased by 8.23% indicating that the revenue of the previous year was used much more for capital investments. We can also see that the earnings per share (EPS) have also reduced by a margin of 4% compared to the previous year. This downward trend might be a reason the company might have reconsidered its investments thus reducing its investments and liabilities. The results of the above downward changes can be reflected clearly in the cash flow statement. It can be seen that the cash flow in operations and investments has reduced greatly indicating reduced market activity and operations.
Looking at the company’s annual report, information and data like the company’s shareholder letter which highlighted the company’s achievements in that year to promote the brand to future buyers. The company’s balance sheet, financial review, earnings, Income statements were reviewed to determine how well the company had performed for the year. The above-mentioned cash flow statement mainly indicated where the company has been and hasn’t been spending money in. The financial statement supports the above information as a gross summary indicating every value in and out of the company. This analysis is usually done by the company’s auditor whose job is to identify and evaluate the finances of the entity.
From the data, it can be seen that the cash spent in acquiring more current assets hasn’t varied by much compared to the previous year. However, the sale of non-current assets has seemed to reduce by a large margin of around 25%. This was determined by the company’s auditors who used a straight-line method to indicate this. It cannot be clearly said as to why this was done except assuming that the company had just taken a minor step-back from investing as highly as it did in the previous year. Apple has refused to release any financial details for the majority of mergers and acquisitions of the current year. As it is, it should be known that Apple has a tendency to acquire small companies whose basis can be implemented into a large-scale project that seems scalable. This has been with many other ventures and has become a sort of philosophy for the company.
The non-current assets like Machinery and equipment, Buildings and leaseholds, Lands, Constructions have all decreased by around 20% and especially land by 40%. The accumulated depreciation of the assets is around 38.7%. The netbook value, deferred income taxes also indicate an increment by margins of 27% and 8%. The goodwill value of the company has increased compared to the previous year. Goodwill is the excess of cost over a fair value of assets acquired. Not to mention, the cost of goods which seemed to be reduced. This agrees with the company trying to become much fairer to its customers and also to attract more no of customers to its brand. However, it is to be noted that the valuation and the assets provided here are of just one year which doesn’t quite tell the whole trend of how it was before the previous fiscal year.
It can be seen that the change in return on the current assets is 1.25% positively indicating smart investments. The change in asset turnover hasn’t varied greatly indicating that lesser investments still had proportionally same returns in the market. The profit margin of the company, however, was estimated to increase by nearly 16% for the next fiscal year. Conclusively, these results indicate that the company might have been testing a financial experiment by reducing the investments to determine how much they could change and the results seem to be positive enough for them to implement in the future. However, when looking at Apple’s current biggest rival, Samsung. It is seen that Samsung’s return on assets is much higher than apple at 8.9%. This has shown that Samsung has had a much more dominant year in the market with exponentially increase sales on its products and a large user base shifting to Samsung from Apple.
However, the following might be much different considering that Apple seems to have made many more investments with the release of higher no of products than ever before. The market values and shares might tip over to a positive note for Apple this time around quite easily.
Considering all the reduced investments of previous years, it can be assumed that the company had a reduced inventory to show for it. This assumption proves correct as the merchandise inventory lowered by 10.22%, followed by raw materials inventory which reduced drastically by 31.04%. The finished goods, obviously turned up less, reducing by 9.24%. This final estimation clearly indicates that the previous year had much better sales and earnings than the current year.
Looking at the analysis, it can be seen that the company clearly has a lower revenue and rate of interest compared to the previous years. This shows that Apple Inc. did not share as much of the marketplace compared to the other IT companies. Despite this, it cannot be enough data to accurately say what were the main reasons for the decline in this particular year except make assumptions. Regardless of the forecasts, it can safely be said that Apple shall be in the topmost tier for as long as they are in the market with their ever-growing reach and research.