(Eve) FIN-350-RS-T1-CompanyFinanciaAnalysisProjectTemplate

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Feb 20, 2024

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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in the market for technology devices which in order to succeed, they must innovate new technology that replaces outdated software.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