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Benchmark- Financial Analysis Project
Apple Inc.
Eve Cheav
Colangelo College of Business, Grand Canyon University
FIN-350, Fundamentals of Business Finance
Professor, Drew
Fones
May 21, 2023
1
Apple Inc., headquartered in Cupertino, California, is an American multinational technology company and the world’s largest technology company by revenue. The company designs and manufactures devices with software applications, associated services, and third-party
digital content, such as smartphones, tablets, notebooks, desktop computers, and peripheral devices (
Apple Inc: Overview
, n.d.). The purpose of the company is to change the way people views technology through innovative hardware, software, and services.
From sec.gov
Company
$ in millions
As of date _09/22__
As of date_09/21___
Cash / Marketable Securities
48304
62639
AR
28184
26278
Inventory
4946
6580
Current Assets
21223
14111
Fixed Assets
217350
216166
Total Assets
352755
351002
AP
64115
54763
Current Liabilities
153982
125481
Total Liabilities
302083
287912
Total Stockholder’s Equity
50672
63090
Total Net Sales / Revenue
394328
365817
COGS
223546
212981
EBIT
119437
108949
Interest Expense
(2931)
(2645)
Earnings / Net Profit / After Tax Profit
99803
94680
Stock Price
-
-
2
Ratios
From chapter 14
From sec.gov
Apple
Microsoft
Ratio Category
Ratio Name
(choose 1 from
each category)
Ratio Formula
12/24/22
ratio
12/25/21
ratio
06/30/21 ratio
1. Liquidity
Current Ratio
Current Assets / Current Liabilities
.88
1.07
2.0
8
2.Effectiveness
/ Asset Mgmt
Account rec turnover
Net sales / Average acc receivable
6.47
7.1
4.42
3. Leverage
D/E ratio
Total liabilities / Shareholders’ equity 5.96
4.56
1.35
4. Profitability Profit Margin
Net Income / Sales
.25
.26
.36
3
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Challenges, Strategies, Growth Plans, Product Changes, and Mission Statement Alignment
Apple Inc. faces significant competition in the market for technology devices which in
order to succeed, they must innovate new technology that replaces outdated software. In addition
to the issues surrounding the privacy and security concerns, the company handles the massive
amounts of user data which it difficult for them to maintaining it. Apple Inc. has restricted their
employee to use ChatGPT and other external artificial intelligence tool which could release
confidential data from their company. Apple has recently exhibited a keen interest in innovative
software applications that leverage generative artificial intelligence, as evidenced by its
examination of such offerings on the App Store (Tilley & Kruppa, 2023). Apple Inc. mission
statement is to “to bring the best user experience to customers through innovative hardware,
software, and services” (Pereira, 2023), the company aims to provide the best customer
experience by offering products that meet to their specific needs. According to the 2020
environmental progress report released by Apple Inc., the company is actively striving towards
achieving carbon neutral throughout its worldwide supply chain and throughout the life cycle of
each of its products. Additionally, the report highlights the company's advancements in waste
reduction and the promotion of safer material usage in its products (Apple Inc., 2022). Recent Trends in the Company’s Stock Price
Upon analyzing the stock performance of Apple Inc. on the Wall Street Journal, it is visible that the stock has shown a positive trend and stable growth in the market even where there are many businesses struggle to keep their business going during the pandemic. In Apple’s latest earnings, investors are satisfying with the outcome of the reported as it marks the second consecutive quarter in which the company has exceeded expectations. In addition to its financial performance, Apple augmented its dividend by 4% and disclosed that its board had sanctioned an
4
extra $90 billion in repurchases. On Friday, there was a 4.7% increase in the value of Apple's shares (Fontana, 2023).
Overall Financial Strength
The liquidity and leverage of the company are both important to the investors, lenders, and other stakeholders because they provide the insight into a company regarding the financial stability, risk exposure, and ability to fulfill financial obligations. The analysis of Apple's current
ratio reveals a slight decrease from the previous year. Which would be better if it increases because it indicates a greater ability to cover short-term obligation. The debt-to-equity ratio represents the proportion of a company's financing that is derived from debt versus equity. It shown it increased from 4.56 to 5.96, which increase financial risk and make the company more vulnerable to economic downturns. In comparison to Microsoft, it has higher current ratio than Apple indicating a stronger short-term liquidity; however, it is noteworthy that both companies have consistently maintained a healthy current ratio over time. As well as for the debt-to-equity ratio in leverage, Microsoft appears to have lower ratio than Apple which has small financial risk
to the company. Evaluation of Efficiency and Effectiveness
Efficiency and effectiveness ratios reveal a company's operational success, resource usage, and financial efficiency. Stakeholders can find opportunities for improvement, operational
inefficiencies, and optimization by monitoring and evaluating these ratios over time. Between 2021 and 2022, the profit margin only decreases one percent if the company able to increase the profit margin it shown the ability to generate profit from sales. Furthermore, the accounts receivable turnover ratio also decreases from the previous year from 7.1 to 6.45. The efficiency and effectiveness of Apple, the does not seems to do well versus last year. The financial 5
performance of Apple was deemed effective overall, and there is an expectation that it will experience further improvement in the future. Upon conducting a thorough examination of financial records, charts, and analyses, it is apparent that Apple presents a promising opportunity for investors.
References
6
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Apple expands the use of recycled materials across its products
. (2022, April 19). Apple Newsroom. https://www.apple.com/newsroom/2022/04/apple-expands-the-use-of-
recycled-materials-across-its-products/
Apple Mission and Vision Statement
. (2023, April 8). Business Model Analyst. https://businessmodelanalyst.com/apple-mission-and-vision-statement/
Fontana, B. F. (n.d.). JPMorgan Chase, Anheuser-Busch, Apple: Stocks That Defined the Week
. WSJ. https://www.wsj.com/articles/jpmorgan-chase-anheuser-busch-apple-stocks-that-
defined-the-week-e13a9dfc
Kruppa, & Tilley. (n.d.). WSJ News Exclusive | Apple Restricts Employee Use of ChatGPT, Joining Other Companies Wary of Leaks
. WSJ. Retrieved May 21, 2023, from https://www.wsj.com/articles/apple-restricts-use-of-chatgpt-joining-other-companies-
wary-of-leaks-d44d7d34
7
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