2. CONTENT
1.Company Background and Recent
Development
2.Ratio Calculation
Profitability
Financial Stability
Price/ Earnings Ratio
3.Interpretation on the Ratio Results
Profitability
Financial Stability
Price/ Earnings Ratio
4.Investment Recommendation
5.Company Financial
P&L Statement
Balance Sheet
Cash Flow Statement
Revenue & Earning Per Share
6.References
PAGES
3. 1. Company Background
Apple Inc. is an American multinational corporation.This company was founded as a
partnership on April 1, 1976, headquartered in Cupertino, California. Steve Jobs,
Steve Wozniak andRonald Waynethatare the great founders of this company.Apple
designed and introduced innovations in mobile phones, personal computer and
portable music players and achieved widespread success with its product for
example iPhone, iPod Touch and iPad.
On January 3, 1977, Apple was incorporated January, without Ronald Wayne, who
sold his share of the company back to Steve Jobs and Steve Wozniak for $800.
Multi-millionaire Mike Markkula provided essential business expertise and funding of
$250,000 during the incorporation of Apple.
In addition, Apple Inc. is the world's third-largest mobile phone maker after Samsung
and Nokia. Fortune magazine had noted Apple is the most admired company in the
United States in 2008, and in the world from 2008 to 2012. On September 30, 2013,
Apple surpassed Coca-Cola to become the world's most valuable brand in the
Omnicom Group's "Best Global Brands" report. However, the company has received
many criticisms for its contractors' labour practices, and for Apple's own
environmental and business practices.
As of May 2013, Apple maintains around four hundred retail stores in fourteen
countries as well as the online Apple Store and iTunes Store, the world's largest
4. music retailer. Apple is the largest publicly traded corporation in the world by market
capitalization, with an estimated value of US$415 billion as of March 2013. As of
Sept 29 2012, the company had 72,800 permanent full-time employees and 3,300
temporary full-time employees worldwide.
Recent Development
On September 17, 2013, Apple Inc. announced that iPhone 5s and iPhone 5c will be
available to customers on September 20 at Apple retail stores and Apple Online
Store (www.apple.com). iPhone5s and iPhone 5c will be available in the US,
Australia, Canada, China, France, Germany, Hong Kong, Japan, Puerto Rico,
Singapore and the UK.It will be released in 25 additional countries on October 25,
2013, and in 12 countries on November 1, 2013.
On September 24, 2013, Apple Inc. updated its iMac product lines with fourth
generation Intel quad-core processors, new graphics, next generation Wi-Fi and
faster PCIe flash storage options.
On October 22, 2013, Apple introduced the iPad Air (5th generation) and a new iPad Mini
with Retina Display. Both devices will go on sale on November 1, 2013, for $499 and $399
respectively. It also introduced the new line of Macbook products and the newly redesigned
Mac Pro.
6. 2. Profitability Ratios
2012
ROE
Return on Equity
2013
= Net Profit
Average of O/E
= Net Profit
x 100%
Average of O/E
x 100%
= 41733000
(76615000+118210000) x100%
2
= 42.8%
NPM
Net Profit Margin
GPM
Gross Profit Margin
SER
Selling Exp.Ratio
GER
General Exp. Ratio
FER
Financial Exp. Ratio
= 37037000
(118210000+123549000) x100%
2
= 30.6%
= Net Profit
Net Sales
= 41733000
156508000
= 26.7%
= Gross Profit
Net Sales
= 68662000
156508000
= 43.9%
= Total Selling Exp.
Net Sales
= 910000
156508000
= 0.58%
= Total General Exp.
Net Sales
= 9130000
156508000
= 5.8%
= Total Financial Exp.
Net Sales
= 00
156508000
= 0%
= Net Profit
Net Sales
= 37037000
x100%
170910000
= 21.7%
x100%
= Gross Profit
Net Sales
= 64304000
x100%
170910000
= 37.6%
x100%
= Total Selling Exp.
Net Sales
= 1291000
x100%
170910000
= 0.76%
x100%
= Total General Exp.
Net Sales
= 9539000
x100%
170910000
= 5.6%
x100%
= Total Financial Exp.
Net Sales
0
0
=
x100%
170910000
= 0%
x100%
x100%
x100%
x100%
x100%
x100%
x100%
x100%
x100%
x100%
x100%
7. Financial Stability Ratios
Working Capital
Total Debt
2012
= Total Current Asset
Total Current liabilities
= 57653000
38542000
= 1.50 : 1
2013
= Total Current Asset
Total Current liabilities
= 73286000
43658000
= 1.68:1
= Total liabilities
Total Assets
= 57854000
176064000
= 32.9%
= Total liabilities
Total Assets
= 83451000
207000000
= 40.3%
x100%
x100%
x100%
x100%
IT
Stock Turnover
= 365 days
(COGS/Average Inventory)
= 365 days
(87846000/783500)
= 3.3days
= 365 days
(COGS/Average Inventory)
= 365 days
(106606000/1277500)
= 4.4days
DT
Debtor Turnover
= 365 days
= 365 days
(Credit sales/ Average Debtors)
(Credit sales/ Average Debtors)
= 365 days
= 365 days
(156508000/17503000)
(170910000/22684500)
= 40.8days
= 48.5days
IC
Interest Coverage
= Interest Expense + Net Profit
Interest Expense
= 0+41733000
0
= 0 times
= Interest Expense + Net Profit
Interest Expense
= 0+37037000
0
= 0 times
P/E Ratio:
*Price/Earnings Ratio = Current Share Price/ Earnings per Share
2013 November 20
Price/Earnings Ratio = 518.629/39.75= 13.05 times
9. 3. Interpretation on Profitability Ratios
Return on Equity (ROE)
During the 2012-2013 periods, the ROE has decreased from 42.8% to 30.6%.
This means that the owner is getting less return on his capital.
Net Profit Margin (NPM)
During the 2012-2013 periods, the NPM has decreased from 26.7% to 21.7%.
This means that the owner is getting less profit from the sales.
Gross Profit Margin (GPM)
During the 2012-2013 periods, the GPM has decreased from 43.9% to 37.6 %.
This means that the ability of the business to control its cost of goods sold is
getting worse.
Selling Expense Ratio (SER)
During the 2012-2013 periods, the SER has increased from 0.58% to 0.76%.
This means that the business is getting worseat controllingits selling expenses.
10. General Expense Ratio (GER)
During the 2012-2013 periods, the GER has decreased from 5.8% to 5.6%. This
means that the business is getting betterat controlling its general expenses.
Financial Expense Ratio (FER)
During the 2012-2013 periods, the FER has remained unchanged from 0% to0%.
This means that the business is doing very well at controlling financial expense.
11. Interpretation on Financial Stability Ratios
Working Capital
During the 2012-2013 periods, the working capital has increased from 1.50:1 to
1.68:1. This means that the business ability to pay the current asset is getting
better. In addition, it does not have the minimum 2:1 ratio so it will experience
difficulty in repaying its current liabilities.
Total Debt
During the 201-2013 periods, the total debt has increased from 32.9% to 40.3%.
This means that the business has more debt on its balance sheet. In addition, it
is still below the maximum 50% limit.
Stock Turnover
During the 2012-2013 periods, the stock turnover has increased from 3.3 days to
4.4 days. This mean the business sell the inventory slower so that it can
generate more cash to pay off its liabilities.
12. Debtor Turnover
During the 2012-2013 periods, the debtor turnover has increased from 40.8 days
to 48.5 days. This means the debtors are taking a longer time to pay off the debt.
Interest Coverage
During the 2012-2013 periods, the interest coverage has remained unchanged
from 0 times to 0 times. This means the business does not have any interest
expenses. In addition, it now satisfied the minimum ratio of 5 times so it is less
likely to bankrupt.
Interpretation on Price/Earnings Ratio
Price/Earnings Ratio
The company’s price/earnings ratio is 13.05. P/E of 13.05 means that an investor
will need to wait for 13 years to recoup his investment and claim back his original
principal.
14. 4. Investment Recommendation
Apple Inc. demonstrated good profitability and strong financial stability, and its
shares are available at a cheap price – P/E of 13.05 – to warrant an investment.
In our opinion, we think that Apple Inc.at 2013 is not that profitable and stable
as compared to the year 2012. Some of the factors contributed to this may be due to
problems of selling or controlling expenses, or maybe some unwanted accidents
happened that made the company not so profitable at the year. However, we still
think that it would be a wise choice to invest in the company.
According to the ratio calculations above, in terms of the profitability ratios, the
company is better at controlling its general expenses in the year 2013 compared to
last year. In terms of financial expenses, the financial expense remained no change.
The company is doing extremely well at controlling its financial expenses.
Another factor that Apple Inc. isrecommended to be invested is because of
the company’s strong financial stability. The total debt for the company is still below
the recommended 50%. The company also satisfy the minimum ratio of 5 times for
interest coverage. It is less likely for the company to bankrupt.
16. P&L Statement
Get Quarterly Data
Period Ending:
Trend
9/28/2013
9/29/2012
Total Revenue
$170,910,000 $156,508,000
Cost of Revenue
$106,606,000 $87,846,000
Gross Profit
$64,304,000 $68,662,000
Operating Expenses
Research and Development
$4,475,000
$3,381,000
Sales, General and Admin.
$10,830,000 $10,040,000
Non-Recurring Items
$0
$0
Other Operating Items
$0
$0
Operating Income
$48,999,000 $55,241,000
Add'l income/expense items
$1,156,000
Earnings Before Interest and Tax
$50,155,000 $55,763,000
Interest Expense
$0
Earnings Before Tax
$50,155,000 $55,763,000
Income Tax
$13,118,000 $14,030,000
Minority Interest
$0
$0
Equity Earnings/Loss Unconsolidated
Subsidiary
$0
$0
Net Income-Cont. Operations
$37,037,000 $41,733,000
Net Income
$37,037,000 $41,733,000
Net Income Applicable to Common
Shareholders
$37,037,000 $41,733,000
$522,000
$0
17. Balance Sheet al Income Statement (values in 000's)
Period Ending:
9/28/2013
9/29/2012
$14,259,000
$26,287,000
$24,094,000
$1,764,000
$6,882,000
$10,746,000
$18,383,000
$21,275,000
$791,000
$6,458,000
Total Current Assets
Long-Term Assets
Long-Term Investments
Fixed Assets
Goodwill
Intangible Assets
Other Assets
Deferred Asset Charges
$73,286,000
$57,653,000
$106,215,000
$16,597,000
$1,577,000
$4,179,000
$5,146,000
$0
$92,122,000
$15,452,000
$1,135,000
$4,224,000
$5,478,000
$0
Total Assets
$207,000,000 $176,064,000
Current Assets
Cash and Cash Equivalents
Short-Term Investments
Net Receivables
Inventory
Other Current Assets
Current Liabilities
Accounts Payable
Short-Term Debt / Current Portion of LongTerm Debt
Other Current Liabilities
Trend
$36,223,000
$32,589,000
$0
$0
$7,435,000
$5,953,000
Total Current Liabilities
$43,658,000
$38,542,000
Long-Term Debt
Other Liabilities
Deferred Liability Charges
Misc. Stocks
Minority Interest
$16,960,000
$20,208,000
$2,625,000
$0
$0
$0
$16,664,000
$2,648,000
$0
$0
Total Liabilities
Stock Holders Equity
Common Stocks
Capital Surplus
Retained Earnings
Treasury Stock
Other Equity
$83,451,000
$57,854,000
$19,764,000
$0
$104,256,000
$0
($471,000)
$16,422,000
$0
$101,289,000
$0
$499,000
18. Total Equity
$123,549,000 $118,210,000
Total Liabilities & Equity
$207,000,000 $176,064,000
Period Ending: Trend
9/28/2013
9/29/2012
9/24/2011
9/25/2010
$37,037,000
$41,733,000
$25,922,000
$14,013,000
Depreciation
$6,757,000
$3,277,000
$1,814,000
$1,027,000
Net Income Adjustments
$3,394,000
$6,145,000
$4,036,000
$2,319,000
Accounts Receivable
($1,949,000)
($6,965,000)
($1,791,000)
($4,860,000)
Changes in Inventories
($973,000)
($15,000)
$275,000
($596,000)
Other Operating
$1,080,000
($3,162,000)
($1,391,000)
($1,610,000)
$8,320,000
$9,843,000
$8,664,000
$8,302,000
$53,666,000
$50,856,000
$37,529,000
$18,595,000
Capital Expenditures
($8,165,000)
($8,295,000)
($4,260,000)
($2,005,000)
Investments
($24,042,000) ($38,427,000) ($32,464,000) ($11,075,000)
Other Investing
($1,567,000)
Net Income
Cash FlowsOperating
Activities
Changes in
Operating
Activities
Activities
Liabilities
Net Cash FlowOperating
Cash FlowsInvesting
Activities
($1,505,000)
($3,695,000)
($774,000)
Activities
Net Cash Flows-
($33,774,000) ($48,227,000) ($40,419,000) ($13,854,000)
Investing
Cash FlowsFinancing
Activities
Sale and Purchase of
($22,330,000) $665,000
$831,000
$912,000
$16,896,000
$0
$0
Stock
Net Borrowings
$0
21. REFERENCE LIST:
Elliot.S, ( 2013)."Apple Passes Coca-Cola as Most Valuable Brand". The New York
Times.Retrieved 21 October 2013.
Michelle.J, ( 2013 ). Samsung thinks the retrial over damages it will pay to Apple Inc.
(AAPL) should be halted pending the outcome of a decision from the USPTO.
Apple Inc. (AAPL) vs. Samsung: Another Delay Requested. Retrieved 19th
November 2013 from http://www.valuewalk.com/2013/11/apple-inc-aapl-vs
samsung-another-delay-requested/
Unknown, ( 2013 ) "The World's Most Admired Companies".Fortune 165 (4): 139
–140. March 19, 2012.
Unknown, ( 2013 ). AAPL Company Financials. Retrieved 20th November 2013 from
http://www.nasdaq.com/symbol/aapl/financials
Unknown, How to find your local Apple retail store.GuideAlert. Retrieved 19th
November 2013 from http://guidealert.com/www-apple-com-retail/
