SlideShare a Scribd company logo
APPLE 1
APPLE 2
Apple – Financial Statement
Name
University
Financial Management
Prof
December 2020
Apple
The most important stakeholders of a company are their
investors. Investors could be someone who is part of the
company where they actually serves a purpose or it could be
just a person who wants to be a part of the company but every
investor usually always do a research on their own about the
company they intend to invest in. Cash flow, income statement
and balance sheet are most important financial statements of a
company that an investor can use to get insights about it.
Having such insights helps the investors make a better decision
on their investment plan and can help calculate the rate of
return on their investment over a period of time. (Crawford,
n.d.)
We have three important financial statements, income
statement, cash flow and the balance sheet for the Apple inc.
(Please refer appendix section). We have the historical data of
Apple Inc. and we will now be using adjusted closing values in
order to calculate the rate of return for the past 20 years.
(Please refer financial statement IV under appendix section).
Once we have the close price for past 20 years, all we have to
do in put those values into our formula in order to calculate the
rate of return. This is one of the very important aspect as an
investor, as it helps them understand if the company is making
profits or surviving losses. And this eventually helps them make
decision on whether to invest or not in a particular company.
(Beattie, 2020).
Formula:
ROI = Final Value of Investment – Initial value of investment /
Cost of investment * 100
The above formula helps the investor calculate the profit/loss
percentage based on the investment done towards a company. It
is very well known that the higher the percentage value, higher
the profits. Now plugging are values into the above formula:
ROI = [(444.46 – 0.92) / 0.92] * 100
= 48,210 %
The final percentage value states that the Apple Inc. has grown
significantly in the last 20 years, with the return rate of
48,210% approximately. After looking at this data investors will
be more inclined to make their investment in Apple Inc.
Beta is another important aspect; which investors consider
before investing into any company. Beta helps the investor
understand the risks that comes along with the stocks. If the
value of Beta is more than one, then the returns are considered
to be higher, but with higher returns comes higher risks. On the
other hand, if the value of Beta is less than 1, then the returns
are considered to be low, but with low risk as well. (Nickolas,
2019). In order to get the value of beta, we need to divide the
value of convergence to its variance. Hence, for apple we get
the value of beta as 1.29. And like I mentioned above, if the
value of beta is higher than 1, then there are higher returns with
higher risks. So, in this case too, Apple stocks have higher
returns, but it comes with great risk.
Return on Annual rate of U.S. treasuries can be calculated using
the value of beta. We need to calculate this rate as a risk-free
rate hence we require U.S. treasury bond yield rate and the
premium towards equity (Chen, 2019). Once we have all the
intended values, we simply plug it into our formula:
Return = Yield rate + Value of Beta * Premium Equity
= (1.24 + 1.29) * 5.50
= 8.28 %
This 8.28% is the percentage of the risk-free returns that the
investors will get by investing into U.S. national treasuries.
Debt is another important aspect that the investor needs to
consider before investing into any company. If the company has
an ample amount of debt, it won’t be a good idea to invest into
such company unless they consider taking extremely high
amount of risks. Cost of debt helps the investors get the insights
of the company and its structure. By understanding the debt, the
investors get to know the risk involved by investing in a
particular company. This cost of debt is nothing but the average
rate of interest that a company or a firm pays off against their
debt. (Zarzycki, 2018). This cost of debt can be calculated by
dividing expenses on interest paid to the tax amount subtracted
by 1. We know for apple the interest amount is $3577 and the
Tax rate is 1114365.
Cost of Debt = interest amount / (1 – Tax rate)
= 3.22 %
The percentage of cost of debt is only 3.22 % which is very low,
and hence Apple Inc. can be a good company to do the
investments for any investors.
Weighted average cost of capital (WACC) is nothing, but the
analysis of company’s capital utilized on each of its equally
distributed proportion of departments. WACC and Beta are
inter-related where if the value of Beta goes up than the value
of WACC goes up as well. On the other hand, if the value of
Beta goes down then the value of WACC also goes down.
WACC = Equity / Debt + Equity * Re + Debt / Debt + Equity *
Rd * (1 – T)
Where,
Re = Cost of Equity
Rd = Cost of Debt
T = Tax shield
Now, let’s calculate WACC for Apple inc.,
WACC = 7.16%
7.16% indicates a strong capital structure of apples each source.
After performing a bunch of calculations, I believe it is safe to
say that the investors can invest into Apple Inc. as they can
expect higher returns. Apple inc. also have a good future and
will be a great investment opportunity for the investors.
Average Annual Rate of Return
We will now be calculating Average annual rate of return for 5
big companies. We will be calculating average annual rate of
return for the year 2019 and 2020 (latest). You’ll find data
related to average annual return for past 20 years in the
Appendix.
Apple
We know that the Average price of Apple stocks in the year
2019 and 2020 were $208.2559 and $314.1174. (Apple inc.,
n.d.). Now in order to calculate the average annual rate of
return, we use the following formula:
Average Annual rate of return = (Final stock price - Initial
stock price) / Initial stock price
= 314.1174 - 208.2559 / 208.2559
= 0.5083
Hence, we get the final Average Annual rate of return as
0.5083, which is equivalent to 51%. It means that the apple had
51% of Average annual rate of return hike from the year 2019 to
2020.
Microsoft
Similarly, we know that the Average price of Microsoft stocks
in the year 2019 and 2020 were $130.382 and $178.147.
(Microsoft inc., n.d.). Now in order to calculate the average
annual rate of return, we use the same formula as before:
Average Annual rate of return = (Final stock price - Initial
stock price) / Initial stock price
= 178.147- 130.382 / 130.382
= 0.366
Hence, we get the final Average Annual rate of return as 0.366,
which is equivalent to 37%. It means that the Microsoft inc. had
37% of Average annual rate of return hike from the year 2019 to
2020.
Walmart
Similarly, we know that the Average price of Walmart inc.
stocks in the year 2019 and 2020 were $108.4054 and
$120.8603 (Walmart inc., n.d.). Now in order to calculate the
average annual rate of return, we use the same formula as
before:
Average Annual rate of return = (Final stock price - Initial
stock price) / Initial stock price
= 120.8603 - 108.4054 / 108.4054
= 0.114
Hence, we get the final Average Annual rate of return as 0.114,
which is equivalent to 11%. It means that the Walmart inc. had
11% of Average annual rate of return hike from the year 2019 to
2020.
Marriot
Similarly, we know that the Average price of Marriot inc.
stocks in the year 2019 and 2020 were $129.393 and $102.9254
(Marriot inc., n.d.). Now in order to calculate the average
annual rate of return, we use the same formula as before:
Average Annual rate of return = (Final stock price - Initial
stock price) / Initial stock price
= 102.9254 - 129.393 / 129.393
= -0.2045
Hence, we get the final Average Annual rate of return as -
0.2045, which is equivalent to negative 20%. It means that the
Marriot inc. suffered losses of 20% of Average annual rate of
return from the year 2019 to 2020.
Coca Cola
Similarly, we know that the Average price of Coca Cola inc.
stocks in the year 2019 and 2020 were $50.8279 and $49.4781
(Coca Cola inc., n.d.). Now in order to calculate the average
annual rate of return, we use the same formula as before:
Average Annual rate of return = (Final stock price - Initial
stock price) / Initial stock price
= 49.4781 - 50.8279 / 50.8279
= -0.0325
Hence, we get the final Average Annual rate of return as -
0.0325, which is equivalent to negative 3%. It means that the
Coca Cola inc. suffered losses of 3% of Average annual rate of
return from the year 2019 to 2020.
To conclude I would say that the investors should consider all
the above-mentioned aspects and factors before investing into
any company. Companies with technologies are booming in
today’s world. Especially due to this pandemic, all the major
companies are going online, because of which some are making
profits, and some are struggling to survive. I would say the best
bet would be to invest in any IT company such as apple or
google, who can survive and return profits even in the situations
like COVID 19.
References
Apple Inc. Common Stock (AAPL). (n.d.). Retrieved on October
11, 2020 from https://www.nasdaq.com/market-
activity/stocks/aapl
Apple Inc. (APPL). (n.d.). Retrieved on October 11, 2020 from
https://finance.yahoo.com/quote/AAPL?p=AAPL
Beattie, A. (June 1 , 2020). A Guide to Calculating Return on
Investment (ROI). Retrieved on October 11, 2020 from
https://www.investopedia.com/articles/basics/10/guide-to-
calculating-roi.asp
Chen, J. (June 25, 2020). Risk-Free Rate of Return. Retrieved
on October 11, 2020 from
https://www.investopedia.com/terms/r/risk-freerate.asp
Crawford, C. (n.d.). Purpose of Financial Analysis. Retrieved
on October 11, 2020 from
https://smallbusiness.chron.com/purpose-financial-analysis-
59178.html
Hargrave, M. (April 20 , 2020). Weighted Average Cost of
Capital – WACC. Retrieved on October 11, 2020 from
https://www.investopedia.com/terms/w/wacc.asp
Marriott International, Inc. (MAR). (n.d.). Retrieved on October
11, 2020 from
https://finance.yahoo.com/quote/MAR?p=MAR&.tsrc=fin-srch
Microsoft Corporation (MSFT). (n.d.). Retrieved from on
October 11, 2020
https://finance.yahoo.com/quote/MSFT?p=MSFT&.tsrc=fin-srch
Nickolas, S. (June 11, 2019). The Formula for Calculating Beta.
Retrieved on October 11, 2020 from
https://www.investopedia.com/ask/answers/070615/what-
formula-calculating-beta.asp
Ross, S. A., Westerfield, R. W., Jordan, R. D.,
(2018). Fundamentals of corporate finance (12 th ed.). McGraw-
Hill
The Coca-Cola Company (KO). (n.d.). Retrieved on October 11,
2020 from
https://finance.yahoo.com/quote/KO?p=KO&.tsrc=fin-srch
Walmart Inc. (WMT). (n.d.). Retrieved on October 11, 2020
from
https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch
Appendix
Figure 1: Income Statement, Retrieved from Apple Inc. (APPL).
(n.d.). https://finance.yahoo.com/quote/AAPL?p=AAPL
Figure 2: Balance Sheet, Retrieved from Apple Inc. (APPL).
(n.d.). https://finance.yahoo.com/quote/AAPL?p=AAPL
Figure 3: Cash Flow, Retrieved from Apple Inc. (APPL). (n.d.).
https://finance.yahoo.com/quote/AAPL?p=AAPL
Figure 3: Close Price
Figure 4: Annual Rate of Return
Figure 5: Annual Rate of Return
Figure 6: Annual Rate of Return
Figure 7: Annual Rate of Return
Figure 8: Annual Rate of Return

More Related Content

Similar to Apple1 apple

Value stock drivers
Value stock driversValue stock drivers
Value stock driversgoplaninick
 
Unit 3 lsal 5223 income statement analysis
Unit 3   lsal 5223 income statement analysisUnit 3   lsal 5223 income statement analysis
Unit 3 lsal 5223 income statement analysis
EltonTooahnippah1
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
roman nnelson
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
andrey_milev
 
First Investment Inc.
First Investment Inc.First Investment Inc.
First Investment Inc.
Melissa Williams
 
Seminar 7 evaluating companies with financial metrics
Seminar 7   evaluating companies with financial metricsSeminar 7   evaluating companies with financial metrics
Seminar 7 evaluating companies with financial metricspvalantagul
 
USING FINANCIAL STATEMENTS INFORMATION
USING FINANCIAL STATEMENTS INFORMATIONUSING FINANCIAL STATEMENTS INFORMATION
USING FINANCIAL STATEMENTS INFORMATION
Doulat panah
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
sergejsvolkovs10
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
garyantione
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
powellabril
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
alicalland
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
ENTIRE COURSES FINAL EXAM
 
Financial Ratios
Financial RatiosFinancial Ratios
Financial Ratios
Crystal Torres
 
Futurum stated and effective interest rate
Futurum   stated and effective interest rateFuturum   stated and effective interest rate
Futurum stated and effective interest rate
Futurum2
 
Stated and effective interest rate
Stated and effective interest rateStated and effective interest rate
Stated and effective interest rate
Futurum2
 
Jamal Adams Economics finance presentation 2010 2011
Jamal Adams Economics finance presentation 2010 2011Jamal Adams Economics finance presentation 2010 2011
Jamal Adams Economics finance presentation 2010 2011
jadamslhs
 
Cfa level 1 quantitative analysis e book part 1
Cfa level 1 quantitative analysis e book   part 1Cfa level 1 quantitative analysis e book   part 1
Cfa level 1 quantitative analysis e book part 1
parmanandiskool
 
Principle corporate finance
Principle corporate finance Principle corporate finance
Principle corporate finance
MohammedFouad66
 

Similar to Apple1 apple (20)

Value stock drivers
Value stock driversValue stock drivers
Value stock drivers
 
Unit 3 lsal 5223 income statement analysis
Unit 3   lsal 5223 income statement analysisUnit 3   lsal 5223 income statement analysis
Unit 3 lsal 5223 income statement analysis
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
 
First Investment Inc.
First Investment Inc.First Investment Inc.
First Investment Inc.
 
Seminar 7 evaluating companies with financial metrics
Seminar 7   evaluating companies with financial metricsSeminar 7   evaluating companies with financial metrics
Seminar 7 evaluating companies with financial metrics
 
USING FINANCIAL STATEMENTS INFORMATION
USING FINANCIAL STATEMENTS INFORMATIONUSING FINANCIAL STATEMENTS INFORMATION
USING FINANCIAL STATEMENTS INFORMATION
 
oracle papel
oracle papeloracle papel
oracle papel
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
 
Finance homework help
Finance homework helpFinance homework help
Finance homework help
 
Financial Ratios
Financial RatiosFinancial Ratios
Financial Ratios
 
Futurum stated and effective interest rate
Futurum   stated and effective interest rateFuturum   stated and effective interest rate
Futurum stated and effective interest rate
 
Stated and effective interest rate
Stated and effective interest rateStated and effective interest rate
Stated and effective interest rate
 
Jamal Adams Economics finance presentation 2010 2011
Jamal Adams Economics finance presentation 2010 2011Jamal Adams Economics finance presentation 2010 2011
Jamal Adams Economics finance presentation 2010 2011
 
Cfa level 1 quantitative analysis e book part 1
Cfa level 1 quantitative analysis e book   part 1Cfa level 1 quantitative analysis e book   part 1
Cfa level 1 quantitative analysis e book part 1
 
Principle corporate finance
Principle corporate finance Principle corporate finance
Principle corporate finance
 
Chp 04 Growthtermvalue Hitam
Chp 04 Growthtermvalue HitamChp 04 Growthtermvalue Hitam
Chp 04 Growthtermvalue Hitam
 

More from sodhi3

A brief description of your employment historyYour career .docx
A brief description of your employment historyYour career .docxA brief description of your employment historyYour career .docx
A brief description of your employment historyYour career .docx
sodhi3
 
A budget is a plan expressed in dollar amounts that acts as a ro.docx
A budget is a plan expressed in dollar amounts that acts as a ro.docxA budget is a plan expressed in dollar amounts that acts as a ro.docx
A budget is a plan expressed in dollar amounts that acts as a ro.docx
sodhi3
 
A 72-year-old male with a past medical history for hypertension, con.docx
A 72-year-old male with a past medical history for hypertension, con.docxA 72-year-old male with a past medical history for hypertension, con.docx
A 72-year-old male with a past medical history for hypertension, con.docx
sodhi3
 
a able aboutaccomplishaccomplishmentachieveachieving.docx
a able aboutaccomplishaccomplishmentachieveachieving.docxa able aboutaccomplishaccomplishmentachieveachieving.docx
a able aboutaccomplishaccomplishmentachieveachieving.docx
sodhi3
 
a brief explanation of the effect of Apartheid in South Africa. Prov.docx
a brief explanation of the effect of Apartheid in South Africa. Prov.docxa brief explanation of the effect of Apartheid in South Africa. Prov.docx
a brief explanation of the effect of Apartheid in South Africa. Prov.docx
sodhi3
 
A 32-year-old female presents to the ED with a chief complaint of fe.docx
A 32-year-old female presents to the ED with a chief complaint of fe.docxA 32-year-old female presents to the ED with a chief complaint of fe.docx
A 32-year-old female presents to the ED with a chief complaint of fe.docx
sodhi3
 
A 4 years old is brought to the clinic by his parents with abdominal.docx
A 4 years old is brought to the clinic by his parents with abdominal.docxA 4 years old is brought to the clinic by his parents with abdominal.docx
A 4 years old is brought to the clinic by his parents with abdominal.docx
sodhi3
 
A 19-year-old male complains of burning sometimes, when I pee.”.docx
A 19-year-old male complains of burning sometimes, when I pee.”.docxA 19-year-old male complains of burning sometimes, when I pee.”.docx
A 19-year-old male complains of burning sometimes, when I pee.”.docx
sodhi3
 
A 34-year-old trauma victim, the Victor, is unconscious and on a.docx
A 34-year-old trauma victim, the Victor, is unconscious and on a.docxA 34-year-old trauma victim, the Victor, is unconscious and on a.docx
A 34-year-old trauma victim, the Victor, is unconscious and on a.docx
sodhi3
 
A 27-year-old Vietnamese woman in the delivery room with very st.docx
A 27-year-old Vietnamese woman in the delivery room with very st.docxA 27-year-old Vietnamese woman in the delivery room with very st.docx
A 27-year-old Vietnamese woman in the delivery room with very st.docx
sodhi3
 
A 25 year old male presents with chronic sinusitis and allergic .docx
A 25 year old male presents with chronic sinusitis and allergic .docxA 25 year old male presents with chronic sinusitis and allergic .docx
A 25 year old male presents with chronic sinusitis and allergic .docx
sodhi3
 
A 500-700 word APA formatted PaperInclude 2 sources on your re.docx
A 500-700 word APA formatted PaperInclude 2 sources on your re.docxA 500-700 word APA formatted PaperInclude 2 sources on your re.docx
A 500-700 word APA formatted PaperInclude 2 sources on your re.docx
sodhi3
 
A 65-year-old obese African American male patient presents to his HC.docx
A 65-year-old obese African American male patient presents to his HC.docxA 65-year-old obese African American male patient presents to his HC.docx
A 65-year-old obese African American male patient presents to his HC.docx
sodhi3
 
A 5-year-old male is brought to the primary care clinic by his m.docx
A 5-year-old male is brought to the primary care clinic by his m.docxA 5-year-old male is brought to the primary care clinic by his m.docx
A 5-year-old male is brought to the primary care clinic by his m.docx
sodhi3
 
92 S C I E N T I F I C A M E R I C A N R e p r i n t e d f r.docx
92 S C I E N T I F I C  A M E R I C A N R e p r i n t e d  f r.docx92 S C I E N T I F I C  A M E R I C A N R e p r i n t e d  f r.docx
92 S C I E N T I F I C A M E R I C A N R e p r i n t e d f r.docx
sodhi3
 
a 100 words to respond to each question. Please be sure to add a que.docx
a 100 words to respond to each question. Please be sure to add a que.docxa 100 words to respond to each question. Please be sure to add a que.docx
a 100 words to respond to each question. Please be sure to add a que.docx
sodhi3
 
A 12,000 word final dissertation for Masters in Education project. .docx
A 12,000 word final dissertation for Masters in Education project. .docxA 12,000 word final dissertation for Masters in Education project. .docx
A 12,000 word final dissertation for Masters in Education project. .docx
sodhi3
 
918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx
918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx
918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx
sodhi3
 
915Rising Up from a Sea of DiscontentThe 1970 Koza.docx
915Rising Up from a Sea of DiscontentThe 1970 Koza.docx915Rising Up from a Sea of DiscontentThe 1970 Koza.docx
915Rising Up from a Sea of DiscontentThe 1970 Koza.docx
sodhi3
 
96 Young Scholars in WritingFeminist Figures or Damsel.docx
96    Young Scholars in WritingFeminist Figures or Damsel.docx96    Young Scholars in WritingFeminist Figures or Damsel.docx
96 Young Scholars in WritingFeminist Figures or Damsel.docx
sodhi3
 

More from sodhi3 (20)

A brief description of your employment historyYour career .docx
A brief description of your employment historyYour career .docxA brief description of your employment historyYour career .docx
A brief description of your employment historyYour career .docx
 
A budget is a plan expressed in dollar amounts that acts as a ro.docx
A budget is a plan expressed in dollar amounts that acts as a ro.docxA budget is a plan expressed in dollar amounts that acts as a ro.docx
A budget is a plan expressed in dollar amounts that acts as a ro.docx
 
A 72-year-old male with a past medical history for hypertension, con.docx
A 72-year-old male with a past medical history for hypertension, con.docxA 72-year-old male with a past medical history for hypertension, con.docx
A 72-year-old male with a past medical history for hypertension, con.docx
 
a able aboutaccomplishaccomplishmentachieveachieving.docx
a able aboutaccomplishaccomplishmentachieveachieving.docxa able aboutaccomplishaccomplishmentachieveachieving.docx
a able aboutaccomplishaccomplishmentachieveachieving.docx
 
a brief explanation of the effect of Apartheid in South Africa. Prov.docx
a brief explanation of the effect of Apartheid in South Africa. Prov.docxa brief explanation of the effect of Apartheid in South Africa. Prov.docx
a brief explanation of the effect of Apartheid in South Africa. Prov.docx
 
A 32-year-old female presents to the ED with a chief complaint of fe.docx
A 32-year-old female presents to the ED with a chief complaint of fe.docxA 32-year-old female presents to the ED with a chief complaint of fe.docx
A 32-year-old female presents to the ED with a chief complaint of fe.docx
 
A 4 years old is brought to the clinic by his parents with abdominal.docx
A 4 years old is brought to the clinic by his parents with abdominal.docxA 4 years old is brought to the clinic by his parents with abdominal.docx
A 4 years old is brought to the clinic by his parents with abdominal.docx
 
A 19-year-old male complains of burning sometimes, when I pee.”.docx
A 19-year-old male complains of burning sometimes, when I pee.”.docxA 19-year-old male complains of burning sometimes, when I pee.”.docx
A 19-year-old male complains of burning sometimes, when I pee.”.docx
 
A 34-year-old trauma victim, the Victor, is unconscious and on a.docx
A 34-year-old trauma victim, the Victor, is unconscious and on a.docxA 34-year-old trauma victim, the Victor, is unconscious and on a.docx
A 34-year-old trauma victim, the Victor, is unconscious and on a.docx
 
A 27-year-old Vietnamese woman in the delivery room with very st.docx
A 27-year-old Vietnamese woman in the delivery room with very st.docxA 27-year-old Vietnamese woman in the delivery room with very st.docx
A 27-year-old Vietnamese woman in the delivery room with very st.docx
 
A 25 year old male presents with chronic sinusitis and allergic .docx
A 25 year old male presents with chronic sinusitis and allergic .docxA 25 year old male presents with chronic sinusitis and allergic .docx
A 25 year old male presents with chronic sinusitis and allergic .docx
 
A 500-700 word APA formatted PaperInclude 2 sources on your re.docx
A 500-700 word APA formatted PaperInclude 2 sources on your re.docxA 500-700 word APA formatted PaperInclude 2 sources on your re.docx
A 500-700 word APA formatted PaperInclude 2 sources on your re.docx
 
A 65-year-old obese African American male patient presents to his HC.docx
A 65-year-old obese African American male patient presents to his HC.docxA 65-year-old obese African American male patient presents to his HC.docx
A 65-year-old obese African American male patient presents to his HC.docx
 
A 5-year-old male is brought to the primary care clinic by his m.docx
A 5-year-old male is brought to the primary care clinic by his m.docxA 5-year-old male is brought to the primary care clinic by his m.docx
A 5-year-old male is brought to the primary care clinic by his m.docx
 
92 S C I E N T I F I C A M E R I C A N R e p r i n t e d f r.docx
92 S C I E N T I F I C  A M E R I C A N R e p r i n t e d  f r.docx92 S C I E N T I F I C  A M E R I C A N R e p r i n t e d  f r.docx
92 S C I E N T I F I C A M E R I C A N R e p r i n t e d f r.docx
 
a 100 words to respond to each question. Please be sure to add a que.docx
a 100 words to respond to each question. Please be sure to add a que.docxa 100 words to respond to each question. Please be sure to add a que.docx
a 100 words to respond to each question. Please be sure to add a que.docx
 
A 12,000 word final dissertation for Masters in Education project. .docx
A 12,000 word final dissertation for Masters in Education project. .docxA 12,000 word final dissertation for Masters in Education project. .docx
A 12,000 word final dissertation for Masters in Education project. .docx
 
918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx
918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx
918191ISMM1-UC 752SYSTEMS ANALYSISFall 2019 –.docx
 
915Rising Up from a Sea of DiscontentThe 1970 Koza.docx
915Rising Up from a Sea of DiscontentThe 1970 Koza.docx915Rising Up from a Sea of DiscontentThe 1970 Koza.docx
915Rising Up from a Sea of DiscontentThe 1970 Koza.docx
 
96 Young Scholars in WritingFeminist Figures or Damsel.docx
96    Young Scholars in WritingFeminist Figures or Damsel.docx96    Young Scholars in WritingFeminist Figures or Damsel.docx
96 Young Scholars in WritingFeminist Figures or Damsel.docx
 

Recently uploaded

Supporting (UKRI) OA monographs at Salford.pptx
Supporting (UKRI) OA monographs at Salford.pptxSupporting (UKRI) OA monographs at Salford.pptx
Supporting (UKRI) OA monographs at Salford.pptx
Jisc
 
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
EugeneSaldivar
 
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
Nguyen Thanh Tu Collection
 
The Diamond Necklace by Guy De Maupassant.pptx
The Diamond Necklace by Guy De Maupassant.pptxThe Diamond Necklace by Guy De Maupassant.pptx
The Diamond Necklace by Guy De Maupassant.pptx
DhatriParmar
 
Lapbook sobre os Regimes Totalitários.pdf
Lapbook sobre os Regimes Totalitários.pdfLapbook sobre os Regimes Totalitários.pdf
Lapbook sobre os Regimes Totalitários.pdf
Jean Carlos Nunes Paixão
 
Biological Screening of Herbal Drugs in detailed.
Biological Screening of Herbal Drugs in detailed.Biological Screening of Herbal Drugs in detailed.
Biological Screening of Herbal Drugs in detailed.
Ashokrao Mane college of Pharmacy Peth-Vadgaon
 
The basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptxThe basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptx
heathfieldcps1
 
2024.06.01 Introducing a competency framework for languag learning materials ...
2024.06.01 Introducing a competency framework for languag learning materials ...2024.06.01 Introducing a competency framework for languag learning materials ...
2024.06.01 Introducing a competency framework for languag learning materials ...
Sandy Millin
 
Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46
Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46
Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46
MysoreMuleSoftMeetup
 
Multithreading_in_C++ - std::thread, race condition
Multithreading_in_C++ - std::thread, race conditionMultithreading_in_C++ - std::thread, race condition
Multithreading_in_C++ - std::thread, race condition
Mohammed Sikander
 
STRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBC
STRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBCSTRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBC
STRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBC
kimdan468
 
"Protectable subject matters, Protection in biotechnology, Protection of othe...
"Protectable subject matters, Protection in biotechnology, Protection of othe..."Protectable subject matters, Protection in biotechnology, Protection of othe...
"Protectable subject matters, Protection in biotechnology, Protection of othe...
SACHIN R KONDAGURI
 
Operation Blue Star - Saka Neela Tara
Operation Blue Star   -  Saka Neela TaraOperation Blue Star   -  Saka Neela Tara
Operation Blue Star - Saka Neela Tara
Balvir Singh
 
Azure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHatAzure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHat
Scholarhat
 
A Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in EducationA Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in Education
Peter Windle
 
The Accursed House by Émile Gaboriau.pptx
The Accursed House by Émile Gaboriau.pptxThe Accursed House by Émile Gaboriau.pptx
The Accursed House by Émile Gaboriau.pptx
DhatriParmar
 
Digital Artifact 2 - Investigating Pavilion Designs
Digital Artifact 2 - Investigating Pavilion DesignsDigital Artifact 2 - Investigating Pavilion Designs
Digital Artifact 2 - Investigating Pavilion Designs
chanes7
 
Pride Month Slides 2024 David Douglas School District
Pride Month Slides 2024 David Douglas School DistrictPride Month Slides 2024 David Douglas School District
Pride Month Slides 2024 David Douglas School District
David Douglas School District
 
Normal Labour/ Stages of Labour/ Mechanism of Labour
Normal Labour/ Stages of Labour/ Mechanism of LabourNormal Labour/ Stages of Labour/ Mechanism of Labour
Normal Labour/ Stages of Labour/ Mechanism of Labour
Wasim Ak
 
The approach at University of Liverpool.pptx
The approach at University of Liverpool.pptxThe approach at University of Liverpool.pptx
The approach at University of Liverpool.pptx
Jisc
 

Recently uploaded (20)

Supporting (UKRI) OA monographs at Salford.pptx
Supporting (UKRI) OA monographs at Salford.pptxSupporting (UKRI) OA monographs at Salford.pptx
Supporting (UKRI) OA monographs at Salford.pptx
 
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...TESDA TM1 REVIEWER  FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
TESDA TM1 REVIEWER FOR NATIONAL ASSESSMENT WRITTEN AND ORAL QUESTIONS WITH A...
 
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
BÀI TẬP BỔ TRỢ TIẾNG ANH GLOBAL SUCCESS LỚP 3 - CẢ NĂM (CÓ FILE NGHE VÀ ĐÁP Á...
 
The Diamond Necklace by Guy De Maupassant.pptx
The Diamond Necklace by Guy De Maupassant.pptxThe Diamond Necklace by Guy De Maupassant.pptx
The Diamond Necklace by Guy De Maupassant.pptx
 
Lapbook sobre os Regimes Totalitários.pdf
Lapbook sobre os Regimes Totalitários.pdfLapbook sobre os Regimes Totalitários.pdf
Lapbook sobre os Regimes Totalitários.pdf
 
Biological Screening of Herbal Drugs in detailed.
Biological Screening of Herbal Drugs in detailed.Biological Screening of Herbal Drugs in detailed.
Biological Screening of Herbal Drugs in detailed.
 
The basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptxThe basics of sentences session 5pptx.pptx
The basics of sentences session 5pptx.pptx
 
2024.06.01 Introducing a competency framework for languag learning materials ...
2024.06.01 Introducing a competency framework for languag learning materials ...2024.06.01 Introducing a competency framework for languag learning materials ...
2024.06.01 Introducing a competency framework for languag learning materials ...
 
Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46
Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46
Mule 4.6 & Java 17 Upgrade | MuleSoft Mysore Meetup #46
 
Multithreading_in_C++ - std::thread, race condition
Multithreading_in_C++ - std::thread, race conditionMultithreading_in_C++ - std::thread, race condition
Multithreading_in_C++ - std::thread, race condition
 
STRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBC
STRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBCSTRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBC
STRAND 3 HYGIENIC PRACTICES.pptx GRADE 7 CBC
 
"Protectable subject matters, Protection in biotechnology, Protection of othe...
"Protectable subject matters, Protection in biotechnology, Protection of othe..."Protectable subject matters, Protection in biotechnology, Protection of othe...
"Protectable subject matters, Protection in biotechnology, Protection of othe...
 
Operation Blue Star - Saka Neela Tara
Operation Blue Star   -  Saka Neela TaraOperation Blue Star   -  Saka Neela Tara
Operation Blue Star - Saka Neela Tara
 
Azure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHatAzure Interview Questions and Answers PDF By ScholarHat
Azure Interview Questions and Answers PDF By ScholarHat
 
A Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in EducationA Strategic Approach: GenAI in Education
A Strategic Approach: GenAI in Education
 
The Accursed House by Émile Gaboriau.pptx
The Accursed House by Émile Gaboriau.pptxThe Accursed House by Émile Gaboriau.pptx
The Accursed House by Émile Gaboriau.pptx
 
Digital Artifact 2 - Investigating Pavilion Designs
Digital Artifact 2 - Investigating Pavilion DesignsDigital Artifact 2 - Investigating Pavilion Designs
Digital Artifact 2 - Investigating Pavilion Designs
 
Pride Month Slides 2024 David Douglas School District
Pride Month Slides 2024 David Douglas School DistrictPride Month Slides 2024 David Douglas School District
Pride Month Slides 2024 David Douglas School District
 
Normal Labour/ Stages of Labour/ Mechanism of Labour
Normal Labour/ Stages of Labour/ Mechanism of LabourNormal Labour/ Stages of Labour/ Mechanism of Labour
Normal Labour/ Stages of Labour/ Mechanism of Labour
 
The approach at University of Liverpool.pptx
The approach at University of Liverpool.pptxThe approach at University of Liverpool.pptx
The approach at University of Liverpool.pptx
 

Apple1 apple

  • 1. APPLE 1 APPLE 2 Apple – Financial Statement Name University Financial Management Prof December 2020 Apple The most important stakeholders of a company are their investors. Investors could be someone who is part of the company where they actually serves a purpose or it could be just a person who wants to be a part of the company but every investor usually always do a research on their own about the company they intend to invest in. Cash flow, income statement and balance sheet are most important financial statements of a company that an investor can use to get insights about it. Having such insights helps the investors make a better decision on their investment plan and can help calculate the rate of return on their investment over a period of time. (Crawford, n.d.) We have three important financial statements, income statement, cash flow and the balance sheet for the Apple inc. (Please refer appendix section). We have the historical data of Apple Inc. and we will now be using adjusted closing values in order to calculate the rate of return for the past 20 years. (Please refer financial statement IV under appendix section).
  • 2. Once we have the close price for past 20 years, all we have to do in put those values into our formula in order to calculate the rate of return. This is one of the very important aspect as an investor, as it helps them understand if the company is making profits or surviving losses. And this eventually helps them make decision on whether to invest or not in a particular company. (Beattie, 2020). Formula: ROI = Final Value of Investment – Initial value of investment / Cost of investment * 100 The above formula helps the investor calculate the profit/loss percentage based on the investment done towards a company. It is very well known that the higher the percentage value, higher the profits. Now plugging are values into the above formula: ROI = [(444.46 – 0.92) / 0.92] * 100 = 48,210 % The final percentage value states that the Apple Inc. has grown significantly in the last 20 years, with the return rate of 48,210% approximately. After looking at this data investors will be more inclined to make their investment in Apple Inc. Beta is another important aspect; which investors consider before investing into any company. Beta helps the investor understand the risks that comes along with the stocks. If the value of Beta is more than one, then the returns are considered to be higher, but with higher returns comes higher risks. On the other hand, if the value of Beta is less than 1, then the returns are considered to be low, but with low risk as well. (Nickolas, 2019). In order to get the value of beta, we need to divide the value of convergence to its variance. Hence, for apple we get the value of beta as 1.29. And like I mentioned above, if the value of beta is higher than 1, then there are higher returns with higher risks. So, in this case too, Apple stocks have higher returns, but it comes with great risk. Return on Annual rate of U.S. treasuries can be calculated using the value of beta. We need to calculate this rate as a risk-free rate hence we require U.S. treasury bond yield rate and the
  • 3. premium towards equity (Chen, 2019). Once we have all the intended values, we simply plug it into our formula: Return = Yield rate + Value of Beta * Premium Equity = (1.24 + 1.29) * 5.50 = 8.28 % This 8.28% is the percentage of the risk-free returns that the investors will get by investing into U.S. national treasuries. Debt is another important aspect that the investor needs to consider before investing into any company. If the company has an ample amount of debt, it won’t be a good idea to invest into such company unless they consider taking extremely high amount of risks. Cost of debt helps the investors get the insights of the company and its structure. By understanding the debt, the investors get to know the risk involved by investing in a particular company. This cost of debt is nothing but the average rate of interest that a company or a firm pays off against their debt. (Zarzycki, 2018). This cost of debt can be calculated by dividing expenses on interest paid to the tax amount subtracted by 1. We know for apple the interest amount is $3577 and the Tax rate is 1114365. Cost of Debt = interest amount / (1 – Tax rate) = 3.22 % The percentage of cost of debt is only 3.22 % which is very low, and hence Apple Inc. can be a good company to do the investments for any investors. Weighted average cost of capital (WACC) is nothing, but the analysis of company’s capital utilized on each of its equally distributed proportion of departments. WACC and Beta are inter-related where if the value of Beta goes up than the value of WACC goes up as well. On the other hand, if the value of Beta goes down then the value of WACC also goes down. WACC = Equity / Debt + Equity * Re + Debt / Debt + Equity * Rd * (1 – T) Where, Re = Cost of Equity Rd = Cost of Debt
  • 4. T = Tax shield Now, let’s calculate WACC for Apple inc., WACC = 7.16% 7.16% indicates a strong capital structure of apples each source. After performing a bunch of calculations, I believe it is safe to say that the investors can invest into Apple Inc. as they can expect higher returns. Apple inc. also have a good future and will be a great investment opportunity for the investors. Average Annual Rate of Return We will now be calculating Average annual rate of return for 5 big companies. We will be calculating average annual rate of return for the year 2019 and 2020 (latest). You’ll find data related to average annual return for past 20 years in the Appendix. Apple We know that the Average price of Apple stocks in the year 2019 and 2020 were $208.2559 and $314.1174. (Apple inc., n.d.). Now in order to calculate the average annual rate of return, we use the following formula: Average Annual rate of return = (Final stock price - Initial stock price) / Initial stock price = 314.1174 - 208.2559 / 208.2559 = 0.5083 Hence, we get the final Average Annual rate of return as 0.5083, which is equivalent to 51%. It means that the apple had 51% of Average annual rate of return hike from the year 2019 to 2020. Microsoft Similarly, we know that the Average price of Microsoft stocks in the year 2019 and 2020 were $130.382 and $178.147. (Microsoft inc., n.d.). Now in order to calculate the average annual rate of return, we use the same formula as before: Average Annual rate of return = (Final stock price - Initial stock price) / Initial stock price = 178.147- 130.382 / 130.382 = 0.366
  • 5. Hence, we get the final Average Annual rate of return as 0.366, which is equivalent to 37%. It means that the Microsoft inc. had 37% of Average annual rate of return hike from the year 2019 to 2020. Walmart Similarly, we know that the Average price of Walmart inc. stocks in the year 2019 and 2020 were $108.4054 and $120.8603 (Walmart inc., n.d.). Now in order to calculate the average annual rate of return, we use the same formula as before: Average Annual rate of return = (Final stock price - Initial stock price) / Initial stock price = 120.8603 - 108.4054 / 108.4054 = 0.114 Hence, we get the final Average Annual rate of return as 0.114, which is equivalent to 11%. It means that the Walmart inc. had 11% of Average annual rate of return hike from the year 2019 to 2020. Marriot Similarly, we know that the Average price of Marriot inc. stocks in the year 2019 and 2020 were $129.393 and $102.9254 (Marriot inc., n.d.). Now in order to calculate the average annual rate of return, we use the same formula as before: Average Annual rate of return = (Final stock price - Initial stock price) / Initial stock price = 102.9254 - 129.393 / 129.393 = -0.2045 Hence, we get the final Average Annual rate of return as - 0.2045, which is equivalent to negative 20%. It means that the Marriot inc. suffered losses of 20% of Average annual rate of return from the year 2019 to 2020. Coca Cola Similarly, we know that the Average price of Coca Cola inc. stocks in the year 2019 and 2020 were $50.8279 and $49.4781 (Coca Cola inc., n.d.). Now in order to calculate the average annual rate of return, we use the same formula as before:
  • 6. Average Annual rate of return = (Final stock price - Initial stock price) / Initial stock price = 49.4781 - 50.8279 / 50.8279 = -0.0325 Hence, we get the final Average Annual rate of return as - 0.0325, which is equivalent to negative 3%. It means that the Coca Cola inc. suffered losses of 3% of Average annual rate of return from the year 2019 to 2020. To conclude I would say that the investors should consider all the above-mentioned aspects and factors before investing into any company. Companies with technologies are booming in today’s world. Especially due to this pandemic, all the major companies are going online, because of which some are making profits, and some are struggling to survive. I would say the best bet would be to invest in any IT company such as apple or google, who can survive and return profits even in the situations like COVID 19. References Apple Inc. Common Stock (AAPL). (n.d.). Retrieved on October 11, 2020 from https://www.nasdaq.com/market- activity/stocks/aapl Apple Inc. (APPL). (n.d.). Retrieved on October 11, 2020 from https://finance.yahoo.com/quote/AAPL?p=AAPL Beattie, A. (June 1 , 2020). A Guide to Calculating Return on Investment (ROI). Retrieved on October 11, 2020 from https://www.investopedia.com/articles/basics/10/guide-to- calculating-roi.asp Chen, J. (June 25, 2020). Risk-Free Rate of Return. Retrieved on October 11, 2020 from https://www.investopedia.com/terms/r/risk-freerate.asp Crawford, C. (n.d.). Purpose of Financial Analysis. Retrieved
  • 7. on October 11, 2020 from https://smallbusiness.chron.com/purpose-financial-analysis- 59178.html Hargrave, M. (April 20 , 2020). Weighted Average Cost of Capital – WACC. Retrieved on October 11, 2020 from https://www.investopedia.com/terms/w/wacc.asp Marriott International, Inc. (MAR). (n.d.). Retrieved on October 11, 2020 from https://finance.yahoo.com/quote/MAR?p=MAR&.tsrc=fin-srch Microsoft Corporation (MSFT). (n.d.). Retrieved from on October 11, 2020 https://finance.yahoo.com/quote/MSFT?p=MSFT&.tsrc=fin-srch Nickolas, S. (June 11, 2019). The Formula for Calculating Beta. Retrieved on October 11, 2020 from https://www.investopedia.com/ask/answers/070615/what- formula-calculating-beta.asp Ross, S. A., Westerfield, R. W., Jordan, R. D., (2018). Fundamentals of corporate finance (12 th ed.). McGraw- Hill The Coca-Cola Company (KO). (n.d.). Retrieved on October 11, 2020 from https://finance.yahoo.com/quote/KO?p=KO&.tsrc=fin-srch Walmart Inc. (WMT). (n.d.). Retrieved on October 11, 2020 from https://finance.yahoo.com/quote/WMT?p=WMT&.tsrc=fin-srch
  • 8. Appendix Figure 1: Income Statement, Retrieved from Apple Inc. (APPL). (n.d.). https://finance.yahoo.com/quote/AAPL?p=AAPL Figure 2: Balance Sheet, Retrieved from Apple Inc. (APPL). (n.d.). https://finance.yahoo.com/quote/AAPL?p=AAPL Figure 3: Cash Flow, Retrieved from Apple Inc. (APPL). (n.d.). https://finance.yahoo.com/quote/AAPL?p=AAPL Figure 3: Close Price Figure 4: Annual Rate of Return Figure 5: Annual Rate of Return
  • 9. Figure 6: Annual Rate of Return Figure 7: Annual Rate of Return Figure 8: Annual Rate of Return