Contact Us
Sign In / Sign Up for FREE
Go to advanced search...

Business Analysis Part II - Essay Example

Comments (0) Cite this document
Apple Financial Analysis (Name) (University) (Course) (Tutor) Apple Inc. as discussed in the previous paper is a California based Technological company that manufactures both hardware and software products. It is one of the most profitable companies in the world…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.7% of users find it useful
Business Analysis Part II
Read Text Preview

Extract of sample "Business Analysis Part II"

Apple Financial Analysis Apple Inc. as discussed in the previous paper is a California based Technological company that manufactures both hardware and software products. It is one of the most profitable companies in the world. It manufactures a variety of products that range from personal computers, portable digital music players such as the iPods, and mobile communication gadgets such as the iPhones. It also manufactures a variety of software products used for professional and personal use and this include its popular browser called safari, professional video editing software, professional photography software and the latest in the hardware in the market: the iPad (DM, 2006). In order to understand the financial health of any company, it is important to review all the financial documents in the company such documents include the traditional balance sheet, income statements and cash flows. This will tell you whether a company is worth investing into or one that will be failing the near future (Richey & Maddron, 2008). Looking at these documents will help us deduce some very important information that is necessary for any investor. These documents will help us in calculating a number of important ratios that tell us everything we need to know about a company. They also help us in evaluating the trends that exist in a certain company and therefore help us in predicting the future of the company (Richey & Maddron, 2008). Financial analysis of Apple indicates so many things about the company. The vertical financial statements will give us immense information about the financial health of the company. This together with the product sales will give us the relevant information to predict the future. In 2010 apple posted net revenue of $20.34 billion and a net quarterly profit of $4.31 billion as compared to 2009 where it had posted revenue of 12.21 billion and a net quarterly profit 2.53 billion. Dell another technology firm posted revenue of $14.9 billion in 2010 up by eleven percent from $13.43bn in its fourth quarter results. Apple posted the highest revenues ever during this period and this is attributed to the high number of sales of its Mac’s, iPhones and iPads (Apple Press, 2010). Apple’s company Gross margin reduced from 41.8 percent in 2009 to 36.9 percent in 2010 (Apple Press, 2009). This is a bad indication as it shows that Apple is incurring a lot of costs in producing its products and services. This high expenditure on production of products is paying off with revenue which is not a bad indicator. Dell on the other hand had a gross margin of 18.7% which was attributed to disciplined pricing, increase in the sale of enterprise products and competitive pricing (Dell, 2011). Comparing the two companies we can conclude that Apple is doing well in the industry and therefore it is wise investing in this company because it means with the money left over it can invest in other projects that will contribute to the increase in revenues for the company. Financial ratios tell us what transpired between a given period and thus help us in assessing the financial health and future prospects of a company (Richey & Maddron, 2008). The Current ratio of Apple is at 1.7 at the moment which is a good indicator for any company (Forbes, 2011). It shows the short term debt paying ability of apple which is above the average, though this ratio has been declining over the years for example comparing to 2007 which stood at 2.7. This constant drop each year could be a sign of deteriorating financial condition of the company. Though it is seen to post high revenue it may not be using resources effectively (Richey & Maddron, 2008). Quick ratio helps us determine how well a company can meet its obligations without having to liquidate or depend heavily on its inventory. Apple’s quick ratio stands at 1.5 at the moment (Forbes, 2011), which has also been dropping over the years as compared to 2007 when it stood at 2.2 (Richey & Maddron, 2008). This is also a bad indicator showing the dwindling financial situation of a company. Comparing the above two rations with another rival company such as HP shows a rather higher value. HP’s current ratio stands at 1.2 while its quick ratio stands at 0.7 (Forbes, 2011). This shows us that Apple is above average in the industry though the figures are dropping each year which is not a good indicator. Accounts receivable turnover for Apple stands at 11.2 which is good because any value above one month is not a good indicator (Forbes, 2011). The return on equity helps investors in measuring how well assets have been employed by management. Apples return on equity stands at 22.1 percent which is very high in the industry and this is a positive aspect of the company. A look at HP shows its receivable turnover and return on assets at 6.5% and 7.5% respectively (Forbes, 2011). This means apple is doing rather well in the industry as compared to HP. The last ratio that would be significant to an investor is the debt to equity ratio. This shows or is a measure of the amount of assets being provided for each dollar of assets being provided by stockholders. If the value is high (this is different in industries) it means that the company has been aggressively financing its growth with debt. The cost of financing this debt may outweigh the return that the company generates on the debt and this may be too much for a company to handle. This in the long run may lead the company to bankruptcy which leaves shareholders with nothing (Richey & Maddron, 2008). Apple’s debt to equity ratio at the moment is 0.00 which means that it does not finance its growth with debts which is a positive aspect for the company (Forbes, 2011). A look at HP’s value, it stands at 0.45 at the moment which is good for the computer industry but higher than Apple’s (Forbes, 2011). Cash flows help understand how money is flows in the company during a given year and can help us understand whether it is worth investing in it or not. Apple’s cash flow has been steady over the time improving each year and is expected to go on like this for the next 10 years. The total cash flow from operating activities in 2010 stood at 18.5 million, investing activities at 13.8 million and financing activities at 1.2 million. In each year there is a change though small but it is quite significant (Yahoo, 2010). It is possible to conclude that Apple is doing well in the computer industry according to the above information from their financial records. It is a company worth investing in because an investor will be guaranteed of good returns. Although there are a few problems as seen from some of the decreasing ratios, there is no cause for alarm as the figures are constant and above average in the industry. This though can be improved by the management if corrective action is taken earlier so as to prevent it from going under. Apple is endowed with the latest technology that is used in designing their products. Apple gets the latest technology before anyone else can get it. This is attributed to the $60 billion reserve that they use it to acquire virtually anything. Once the company identifies new technology they pay for the construction cost of that factory in exchange for the output production of the given factory for a given period of time (Gobry, 2011). The second technological advantage that they used to have until a week ago was Steve jobs, Apple’s former CEO, who had experience in hardware mass production. This gave apple a big advantage over its rivals as it had an exclusive supply chain of advanced technology. The other technological advantage is that they have production equipment that produces products of superior design. They have this aluminum machining technology that is exclusive to them making them produce products of unsurpassed strength and lightness (Gobry, 2011). Apple has no rival when it comes to technology. They have the best technology. Toshiba and HP have tried to produce quality products but their technology is still much far behind that of Apple. Apple business strategy is all about design and innovation. It brings with it the best technology in terms of personal computing and mobile communication systems coupled with innovativeness in design and architecture. Globalization has positively affected Apple in different ways. It has managed to open a number of stores in many different cities of the world thus bringing its technology with it to other countries (Richey & Maddron, 2008). This expansion has greatly contributed to the growth in revenue and the economy of those countries. Its innovative nature and designs have incorporated the many languages of the world in its products thus enabling people to use their products with ease as compared to their rivals (Prakash & Hart, 2000). The ease with which people can access their websites and order for products has also contributed a lot to its increased revenues internationally. Therefore from the few examples above globalization has worked to the advantage off apple as it complements its business strategy and thus bringing in more revenue to the company (Dedrick & Kraemer, 2008). Benchmarking analysis refers to the process of continual improvement through systematic analysis and action to improve production efficiency and profitability. The analysis involves a series of questions ranging from what is the standard level of performance, who is the best in the industry, how do I compare with the best company in the industry and how do I compare to others in the industry (Fleisher & Bensoussan, 2007). Apple is a company that is admired across the computer industry not only for its ability to post the highest revenues but also for its technological capability and innovativeness. It sets the standards for others in the market. Its best practices are being adopted by their competitors in the industry simply because they have worked well for them for a long time. The only company that comes close to apple in terms of design and innovation is Toshiba which has tried to come up with products that can be matched to those of Apple. Though they have tried they are still dragging behind in terms of new technology that Apple has access to before them (Gobry, 2011). Apples operations and processes yield the best products in the market. Its marketing strategy is the best in the industry. It has also been able to venture into other countries and has got a large percentage of the economy in such countries. This has given it an edge over everyone else with rival companies adopting some of their processes and techniques (Richey & Maddron, 2008). This means they are already there and need to continue working harder to maintain the top position. For example dell has been trying to fight hard to compete with apple and thus has been forced to adopt some of apple’s business operations and processes but is still far from coming closer to Apple. Apples products are classy and trendy. The names iPhone and iTunes have become street names in America. People own the brand because of the unique features and capabilities they come with. They have the resources to manufacture products that suit people’s needs and taste and therefore they have won the hearts and minds of people. Apart from the few faulty ones that they have recalled the company is doing well in terms of products and this gives them an added advantage in the industry (DM, 2006). References Apple Press. (2009, October 19). Apple reports fourth Quarter results. Retrieved October 12, 2011, from Apple Inc: Apple Press. (2010, October 18). Apple Reports fourth Quarter Results. Retrieved October 12, 2011, from Apple Inc: Dedrick, J., & Kraemer, K. L. (2008). Global of Innovation: The personal computing industry. Sloan Industry Studies Annual Conference (pp. 1-65). Boston, MA: Sloan Foundation. Dell. (2011). Fiscal year 2009 in Review. Retrieved October 12, 2011, from Dell computers: DM. (2006, November). Apple Computer, Inc:Company profile. Retrieved October 12, 2011, from Data Monitor: Fleisher, B. a., & Bensoussan, B. E. (2007). Business and competitive analysis: effective application of new and classic methods. New York: FT Press. Forbes. (2011, October). Apple Inc: Financial Ratios and Returns. Retrieved October 12, 2011, from Forbes: Forbes. (2011, October). HPQ Finacial Ratios and Returns. Retrieved October 12, 2011, from Forbes: Gobry, P. E. (2011, July 04). Apple's… Exclusive Supply Chain Of Advanced Technology [Is] Literally Years Ahead Of Anyone Else On The Planet. Retrieved October 12, 2011, from Business Insider: Prakash, A., & Hart, J. A. (2000). Coping with globalization . London, UK: Routledge. Richey, J., & Maddron, C. (2008, February 13). Financial Analysis of Apple, Inc. Retrieved October 12, 2011, from Yahoo. (2010). Apple inc: cash flows. Retrieved October 12, 2011, from Yahoo Finance: Read More
Cite this document
  • APA
  • MLA
(“Business Analysis Part II Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Business Analysis Part II Essay Example | Topics and Well Written Essays - 750 words. Retrieved from
(Business Analysis Part II Essay Example | Topics and Well Written Essays - 750 Words)
Business Analysis Part II Essay Example | Topics and Well Written Essays - 750 Words.
“Business Analysis Part II Essay Example | Topics and Well Written Essays - 750 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Business Analysis Part II

Internal and External Environmental Analysis for the Bakery Business

Liberalization of foreign investment and technology policy of the government is supportive of establishing industrial units in the country.

Threat: The UK food regulatory authority is planning to enforce the EC Regulations relating to food labeling. The labeling requirements under the new regulations will affect the food industry as the suppliers will be legally obliged to disclose the GM content of foods to the caterers. Thus business firms in the bakery industry also will be effected through the exclusion of flexible manner of labeling arrangements in the case of flour confectionery involving GM Soya or maize. (Genetically modified and novel foods (labeling) (England) regulations, 2000).

Trend: The new subs...
6 Pages (1500 words) Case Study

The Necessity of Job Analysis

... Lecturer: presented: Job Design Job design is an arrangement of procedures and organization of work which indicates the techniques and the interactions which are put in place in order to suit the technical and managerial requirements while on the other hand to satisfy the individual needs of the employees. It highlights the occupation structure, the duties of the workers as well as guidelines regarding the information which the worker is supposed to access. The importance of job analysis in human resources is to help the management to ascertain and endorse the usefulness of certain activities which take place in employment such as employment procedures such as training, choice of the appropriate employees, reparation as well...
7 Pages (1750 words) Coursework

The Management, Leadership and Teamwork Competencies Required by a Small Business Owner

On the other hand organizational leadership is defined as the ability based on the specific skill of an individual to lead his/her subordinates in a manner that pre-planned organizational goals could be achieved within the defined time-frame.

According to Burns (1978) and Bass (1985), transformational leadership has a set of category constructs such as values, morals, farsightedness, long term goals, principles, acute awareness about the dividing line between causes and symptoms, mission statements, strategic perspectives, and human resources. Similarly, they identify a set of category constructs in the transactional leadership also. For instance concentration on the task at hand, short term goals and tactics, confusion co...
6 Pages (1500 words) Coursework

Comparative Family Analysis

The second component of this essay will be a comparative analysis with the American family to the Arab family, generally speaking, but also clearly described by Homa Hoodfar, in her book Between Marriage and the Market. This essay will discuss the impact of globalization on different types of families in different societies and cultures. The terms ‘traditional’, ‘modern’ and ‘postmodern’ will be defined, elaborated upon and discussed on a continuum of change. Social change, in the face of globalization, will be discussed in relation to how cultures and families have grown or resisted the forces of globalization. We now turn to an exploration of the types of families in the world and follow...
6 Pages (1500 words) Coursework

Economic Analysis of India

The country’s economy is fast growing with a stable political system that encourages foreign investment although with certain restrictions. The country generally has good energy, transport and communication systems which make the cost of doing business affordably.

The Republic of India found South of Asia is by far the world’s most populous democracy and ranks seventh largest in terms of geographical area (Brown, 1994). India is also the second most highly populated country in the world. The country has a rich culture with four major religions having originally emerged from it; Sikhism, Buddhism, Hinduism, and Jainism. The Indian Republic consists of seven union territories and 28 states and ranks twelfth la...
8 Pages (2000 words) Case Study

Business Plan Real Estate Agency

re representing our company as their business consultants and our responsibilities are limited to the knowledge of the client’s business and information provided by the client.
The company Of-Fit has been operating as office supplies and equipment supplier since 1998. Their corporate office is in Aberdeen and it has excellent industry relations. The company is a sole proprietorship and its owner is Mr. Andrew Schwatz who has been working in the industry for more than 20 years. The company current staff is 8 and its revenues are £115,690 and £156,178 in 2008. The company aims to expand its operations in other business areas and regions of the UK.
The detailed business plan developed for this report incor...
12 Pages (3000 words) Business Plan

Business Sustainability and Society: Coca-Cola Company

... that business ethics has now become a component limited to theoretical policies and frameworks of business organizations, and such principles and ideologies although enable an organization to acquire income in a fair manner, however, it is now fading gradually from the business sectors. Brief analysis (Chadwick & Schroeder, pp. 11-18, 2002) has indicated that a set of ethical principles exist in almost every business organization globally; however, executives are not ensuring its implementation on ground reality level. For such reason, a number of researchers (Crane, pp. 43-48, 2007) are putting efforts to analyze different practices of business organizations in light of ethical theories and frameworks that has become a major concern...
10 Pages (2500 words) Case Study

Analysis of Educational Website

Since antiquity, education remained a major component of human societies; however, until a few decades ago, it existed in the society in its traditional and conventional form that involved one-to-one interaction of teachers with their students in classrooms. For a few years, educators and scholars have witnessed rapid advancements in the field of information and technology that have altered almost every sector of society in a rapid manner, and so the education sector as well. In such advancements, the internet has now become one of the most popular platforms for students, teachers, businesspersons, and individuals from every sector to acquire education and information within a few clicks and minutes. In other words, the availabili...
7 Pages (1750 words) Article

International Business: World Economic Forum and Davos 2010

...Introduction Globalization, one of the most hotly debated issues means global capitalism to some while others consider it to be the continuation of modernism with the forces of wealth, progress, democracy and happiness at play (Kellner, 2002). Globalization is considered to be beneficial which promotes economic prosperity, cultural diversity and technological advancement. According to the critical social theory, technology and capital work together to create a new globalized and interconnected world. While each force of globalization is important, technological revolution has impacted the business models, value creation and differentiation (Spelman, 2010). The cloud computing technologies that have made the popular social networking...
7 Pages (1750 words) Coursework

Analysis of Articles about Climate Change

...Climate change Can we imagine an Earth where there are no green mountains, no deep blue seas and no living creatures? No. But a disaster of such magnitude and dimension is looming over Earth. Humans have identified this threat, defined it and given it a name, global warming. This dangerous proposition is based on the truth that even a 5 % increase in the surface temperature on Earth can wipe out life from this beautiful planet. And the temperature is increasing as never before. It was in 1990s that the world began to hear serious warnings on global warming and climate change. The summary for policy makers prepared as part of the first assessment report by Inter-governmental Panel on Climate Change was the first ever in depth study...
6 Pages (1500 words) Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Business Analysis Part II for FREE!

Contact Us