Apple Companys Products and Financial Analysis - Example

Apple Inc. Name: University: 1.0 Company overview Founded in 1977 and is headquartered in in Cupertino, California, Apple Inc. is a diversified technology company that sells consumer electronics, software applications, online services, downloadable music among other products. Therefore, the company designs, manufactures, and markets portable computers, media devices and mobile communication, portable digital music players, as well as sells third-party digital content and applications, related software, network solutions, and services. Some of the popular products by Apple include; the iPhone Smartphone, the iPad tablets, Mac computers, and iOS operating system (Apple Inc., 2014) Boston Consulting Group has continuously ranked Apple as the year’s most innovative company since 2005 (Boston Consulting Group, 2014). Apple introduced and popularized the Smartphone and touch screens in a market that had no prior experience in such devices. Other innovations by the company such as the iPod, iTunes, iTV and iCloud have positioned Apple as a dynamic innovator (Hitt, Ireland, & Hoskisson, 2012). Continuous innovation is crucial for Apple in acquiring new customers and maintaining its existing customers Apple has a unique distribution channel as compared to its competitors. Apple products are availed to the consumers through the Apple stores and third party partners who are mostly network providers. Consumers can get information and support for the new iPhone 6 through the licensed partners and at Apple retail stores (Tobak, 2010). Currently, Apple has more than 400 stores mostly located in high-traffic shopping malls and shopping districts in 16 countries and an online store available in 40 countries worldwide (Apple Inc., 2014). The online store allows Apple to sell its products in markets where it is yet to open retail stores or enter into partnership with third party distributors. Apple uses it store to promote its brands through in-store advertisements and demonstration by trained staff. The stores are also used to offer repair fix software bugs for Apple customers in different locations (Moorman, 2012). 2.0 Company’s Products Apple’s core products lines are iPod portable media player, iPad tablet computer, iPhone smart phone, and Maciantosh computer line. Initially, Apple Inc. was predominantly a manufacturer of personal computers but due to low sales and a declining market share, the company has diversified into other areas so as to increase its revenue and market share. Currently, the company also sells related software, accessories, third-party content and applications, services, and network solutions. Apple Inc. offer iPad, a line of multi-purpose tablets; iPhone, a line of smartphones that comprise a phone, internet device, and music player; iPad, a line of portable digital music and media players such as iPod nano, and iPod shuffle; and Mac, a line of desktop and portable personal computers. In addition, the company also offers iTune store and iTune app; iCloud, a cloud service; Mac App store that enable customers to discover, download, and install Mac applications; Apple TV; IOS and OSX operating software; and iCloud, a cloud service. Moreover, it offers various Apple-branded and third-party Mac-compatible and iOS-compatible accessories, including headphones, cases, displays, storage devices, and various other connectivity and computing products and supplies 3.0 Organization Culture Organization culture refers to the behavior of people within an organization. Apple’s culture includes its organization vision, mission and values. 3.1 Vision statement It is a statement that describes what a company would like to accomplish in the future. Its main purpose is to guide an organization in choosing its current and futures course of action 3.1.1 Vision statement of Apple Inc “Man is the creator of change in the world. As such he should be above systems and structures, and not subordinate to them (Apple Inc., 2014).” 3.1.2 Explanation of Apple’s vision Apple has been implementing it vision through developing technologies for consumers. The company strives to develop products that make its consumers masters when they buy them. Moreover, it lives this vision by ensuring it employees understands it and strive to reach it. 3.2 Mission Statement It is a statement that defines what a company is, why it exists as well as its reason for being. It basically defines who the company’s primary customers are, its geographical location which it operates, and identify its products and services offered to its customers. 3.2.1 Mission statement of Apple “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad (Apple Inc., 2014).” 3.3 Values According to apple investors (2014), Apple values are the customs, qualities, standards, as well as principles that will assist the company as well as its employees to succeed. These values form the basis for what they do and how they do it and taken together, they identify Apple as a unique company. The following are the values that govern Apple’s business conduct; Aggressive/Achievement Empathy for consumers Innovation/Vision Positive Social Contribution Individual Reward Quality/Excellence Team Spirit Good Management 5.0Employees Since its establishment in 1977, Apple Inc. has employed many employees worldwide and this number stands at 92,600 people in 2014 (Apple Inc., 2014). Working at Apple can be tough as employees have to put up with excessive level of secrecy, non-stop pressure to perform at their level best and crazy working hours. However, working in Apple Inc. is not all that bad going by the reviews of former and current employees who stated that they loved working for Apple due to many benefits. 5.1 Employee Benefits To start with Apple Inc. offer pretty good salaries to its employees compared to the industry average. Apart from employees being paid well, they also enjoy the following benefits; Insurance, Health & Wellness Health Insurance Flexible spending Account Supplemental Life Insurance Vision insurance Life insurance Disability Insurance Financial & Retirement Retirement Plan Performance Bonus Equity Incentive plan Charitable Gift Matching Stock Options Employee Stock Purchase Plan Professional Support Job Training Tuition Assistance Professional Development Diversity Program Vacation & Time off Vacation & paid time off Paid Holiday Sick Days Bereavement Leave 5.2 Employee Attributes Apple is one of the most successful companies in the world and therefore its employees are very engaged. Apart from the academic qualifications one must possess to be employed in Apple, a one must also have the following attributes Ambitious Creative Confident Passionate Honest Reliable 6.0 Financial Analysis 6.1 Income Statement This is a statement that shows the profit/loss a company has generated in a financial year. To analyze the financial performance of Apple, we are going to analyze some few components of the company’s income statement Revenue Apple’s total revenue increased from $170.910B in 2013 to $182.795B in 2014. However, the sales growth ratio decreased from 9.55% in 2013 to 6.72% in 2014 and this is attributed to increase competition from the company’s competitors Gross profit Gross profit increased from $64.304B to $70.537B which represents a growth of 10.62%. As a result, the gross profit margin ratio increases from 37.62% in 2013 to 38.59% in 2014. This increase maybe as a result of efficiency operation which has reduced the cost of goods sold Net Profit Apple is one of the most profitable brands in the world today (Adams, 2013). The company’s net profit increased from $37.037B in 2013 to $39.510B in 2014. High profitability puts Apple in a very favorable position to innovate, acquire rival firms and implement strong advertisement campaigns to counter competition. Moreover, the net profit ratio also increased from 21.67% in 2013 to 21.80% in 2014. This increase implies that the company has better control of its cost compared to the previous year (Peavler 2010) 6.2 Balance sheet Assets Apple’s total assets increased from $207B in 2013 to $231.839B in 2014 which represents a growth of 12%. The company has used these assets efficiently and effectively since they have used them to generate more revenue for the company resulting to an increase in revenue in 2014. Equity and liabilities Apple’s total liabilities have increased from $83.45B in 2013 to $120.29B in 2014. However, the company’s total equity has decreased from $123.55B in 2013 to $111.55 in 2014. This increase and decrease will have an effect on the company’s gearing level and as per the analysis the gearing level of Apple is very high since the gearing ratio of the company was at 67.5% in 2013 and this has increased to 107.8% in 2014 which means an investors is faced by a higher risk when investing in this company. From the financial statement, we can also assess the company’s liquidity position by looking at the current ratio. From the balance sheet, the current assets decreased from $73.286 in 2013 to $68.531 in 2014 while current liabilities increase from $43.66 in 2013 to 63.45B in 2014. As a result, the company’s current ratio decreased from 1.67 in 2013 to 1.08 in 2014. Although, the ratio is greater than 1 which means that Apple can pay debts when they fall due, this might be of concern to creditors since the ability of the company to pay debts when they fall due is decreasing at an alarming rate. References Apple Inc. 2014. Apple. Retrieved December 31st 2014, from Apple: https://www.apple.com Boston Consulting Group. 2014. Apple's innovations - Boston.com.. Retrieved on 31st December 2014 from http://www.boston.com/business/technology/gallery/Appleinnovations Hitt, M., Ireland, D., & Hoskisson, R. 2012. Strategic Management Cases: Competitiveness and Globalization. Cengage Learning. Peavler, R(2010). Use profitability ratios in Financial Ratio Analysis. Retrieved on 31st December 2014 from http://bizfinance.about.com/od/financialratios/a/Profitability_Ratios.htm Tobak, S. (2010). How to sell like Apple. CBS News. [Online] Available from: http://www.cbsnews.com/news/how-to-sell-like-apple/ Moorman, C. (2012, October 7) Why Apple is a Great Marketer. Forbes [Online]. Available from: HYPERLINK "http://www.forbes.com/sites/christinemoorman/2012/07/10/why-apple-is-a-great-marketer/" http://www.forbes.com/sites/christinemoorman/2012/07/10/why-apple-is-a-great-marketer/ [Accessed 2014 December 31st] Annual Income Statement (values in 000's) Period Ending: Trend 9/27/2014 9/28/2013 9/29/2012 9/24/2011 Total Revenue $182,795,000 $170,910,000 $156,508,000 $108,249,000 Cost of Revenue $112,258,000 $106,606,000 $87,846,000 $64,431,000 Gross Profit $70,537,000 $64,304,000 $68,662,000 $43,818,000 Operating Expenses Research and Development $6,041,000 $4,475,000 $3,381,000 $2,429,000 Sales, General and Admin. $11,993,000 $10,830,000 $10,040,000 $7,599,000 Non-Recurring Items $0 $0 $0 $0 Other Operating Items $0 $0 $0 $0 Operating Income $52,503,000 $48,999,000 $55,241,000 $33,790,000 Add'l income/expense items $980,000 $1,156,000 $522,000 $415,000 Earnings Before Interest and Tax $53,483,000 $50,155,000 $55,763,000 $34,205,000 Interest Expense $0 $0 $0 $0 Earnings Before Tax $53,483,000 $50,155,000 $55,763,000 $34,205,000 Income Tax $13,973,000 $13,118,000 $14,030,000 $8,283,000 Minority Interest $0 $0 $0 $0 Equity Earnings/Loss Unconsolidated Subsidiary $0 $0 $0 $0 Net Income-Cont. Operations $39,510,000 $37,037,000 $41,733,000 $25,922,000 Net Income $39,510,000 $37,037,000 $41,733,000 $25,922,000 Balance Sheet (values in 000's) Period Ending: Trend 9/27/2014 9/28/2013 Current Assets Cash and Cash Equivalents $13,844,000 $14,259,000 Short-Term Investments $11,233,000 $26,287,000 Net Receivables $31,537,000 $24,094,000 Inventory $2,111,000 $1,764,000 Other Current Assets $9,806,000 $6,882,000 Total Current Assets $68,531,000 $73,286,000 Long-Term Assets Long-Term Investments $130,162,000 $106,215,000 Fixed Assets $20,624,000 $16,597,000 Goodwill $4,616,000 $1,577,000 Intangible Assets $4,142,000 $4,179,000 Other Assets $3,764,000 $5,146,000 Deferred Asset Charges $0 $0 Total Assets $231,839,000 $207,000,000 Current Liabilities Accounts Payable $48,649,000 $36,223,000 Short-Term Debt / Current Portion of Long-Term Debt $6,308,000 $0 Other Current Liabilities $8,491,000 $7,435,000 Total Current Liabilities $63,448,000 $43,658,000 Long-Term Debt $28,987,000 $16,960,000 Other Liabilities $24,826,000 $20,208,000 Deferred Liability Charges $3,031,000 $2,625,000 Misc. Stocks $0 $0 Minority Interest $0 $0 Total Liabilities $120,292,000 $83,451,000 Stock Holders Equity Common Stocks $23,313,000 $19,764,000 Capital Surplus $0 $0 Retained Earnings $87,152,000 $104,256,000 Treasury Stock $0 $0 Other Equity $1,082,000 ($471,000) Total Equity $111,547,000 $123,549,000 Read More