analysis of apple company by myassignmenthelp.net

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analysis of apple company by myassignmenthelp.net

  1. 1. Apple Inc Financial Analysis
  2. 2. • Co-founded by Steve Jobs • Product categories – personal computers, communication devices, media devices, and portable digital music players • Services – iTunes, Network Solutions • Brands – iPod, iPhone, iPad, iMac, OSX • Distribution Channel – Online stores, Apple Stores, VAR’s etc • Market Segments – education, creative enterprise markets, consumers and business enterprises Company Background
  3. 3. Profitability Ratios Table 2012 2011 2010 2009 2008 Net sales $ 1,56,508 $ 1,08,249 $ 65,225 $ 42,905 $ 37,491 Net income $ 41,733 $ 25,922 $ 14,013 $ 8,235 $ 6,119 Sh.holders’ equity $ 1,18,210 $ 76,615 $ 47,791 $ 31,640 $ 22,297 Net Profit margin 26.7% 23.9% 21.5% 19.2% 16.3% Return on Equity 35.3% 33.8% 29.3% 26.0% 27.4%
  4. 4. Profitability Ratios • Net Profit Margin – Ratio has consistently improved over the years – From 2008 to 2012, net profit margin has expanded by 63.3%. – High margin despite high operating expenses relative to competition • Return on Equity – Efficiency in investing its stockholder’s capital – Consistent increase in this ratio dues to consistent growth in net income
  5. 5. Debt Coverage Ratios Table 2012 2011 2010 2009 2008 Total cash, and cash equivalents 1,21,251 81,570 51,011 33,992 24,490 Total assets 1,76,064 1,16,371 75,183 47,501 36,171 Total long-term obligations 16,664 10,100 5,531 3,502 1,745 Total liabilities 57,854 39,756 27,392 15,861 13,874 Total shareholders’ equity 1,18,210 76,615 47,791 31,640 22,297 Long term debt to Capital 0 0 0 0 0 Total Liabilities to total assets 0.33 0.34 0.36 0.33 0.38
  6. 6. Debt Coverage Ratios • Long term Debt to Capital – Ability to pay debt using current assets after paying off current liabilities – Ratio no longer relevant as company is debt free • Total Liabilities to Total Assets – Measures degree of financial leverage – A ratio less than 1 indicates that company has enough total assets to meet its total liabilities – Apple had a sound ratio of 0.33 in 2012
  7. 7. Retained Earnings Analysis • The retained earnings have increased by $38.4 Bn in 2012 to $101.3 Bn. • The company has been accumulating a large part of its earnings. This is reflected from the fact that while the diluted earnings per share for year 2012 was $44.15, the dividend per share ratio was just 2.65, that is a dividend to earnings ratio of just 6%. • High Cash hoard
  8. 8. Statement of cash Flow Analysis • Operating cash flow to total long term liabilities is 3 times representing that company can pay off all its long term liabilities with cash flows of just 4 months (1/3 of an year). • The cash cycle is under 61 days. This could be attributed to the position the company enjoys at the pinnacle of the industry and is therefore able to dictate terms with its buyers and suppliers.
  9. 9. Recommendation • Apple is sitting on huge piles of cash – Cumulative cash reserve of $121 billion • Cash should be invested in high yielding securities • Cash can also be used to grow inorganically via acquisitions • Excess cash be distributed to shareholders as dividends
  10. 10. Thanks

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