Apple, Inc. Business Analysis - Essay Example

? Apple, Inc. Business Analysis Introduction Apple Incorporation was established in the year 1976 by Steve Jobs and Steve Wozniak and has its head office in California. The company enjoys a well reputed history over quite an extended period in the field of manufacturing, designing as well as in marketing. These mentioned services were offered in relation to personal computers along with the associated services software, networking solutions and peripherals across the globe. Presently, the company has been observed to benefit from a market share of above 87.3 percent in the global automotive market with regard to its MP3 players and iPod along with its products related to personal computer. The mentioned products named Macintosh was found to command its share to around 2 percent in the global Personal Computer market. Apart from iPod, Apple also indulges in designing, marketing and developing the associated accomplices as well as services. The company even deals online in music stores along with making available its software related to iTunes in Windows as well as Mac OS. The music store operated by the company online has a strong legal presence in the download market and dominated it by around 70 percent. The company even offers products as software for the reason of offering information to the students. In addition, the company offers other additional third-party computing products as well as supplies in a wide range (Lin, 2005). The financial position of the company Apple is compared with two other companies in this paper so as to ascertain its financial health based on the income statement, cash flow and balance sheet. The two companies with which Apple would be compared are Dell and IBM. With this concern, the balance sheet, income statement and the cash flow statements of Apple Inc. has been studied in order to ascertain the financial health of the company. Financial Comparison & Review In its current performance, Apple recorded a net income of $25,922 million and the cash generated from the operating activities amounted to $37,529 million which depicted a huge increase compared to its previous year, 2011. The net revenue of the company was also recorded to be $28,270 million, increasing by a huge margin from the previous year that is 2010. The total assets had also increased remarkably in contrast to the previous years. Furthermore, a huge increase in the goodwill of the company was also recorded which proved to be a favorable indication for the company. The total equity was observed to depict an increase compared to the previous year (Apple Inc, 2011). Therefore, it could be inferred that the company displays a strong financial position currently. It was observed after studying the financial statements of Dell that the revenue of the company increased by a significant 16 percent. The revenue amounted to $61.5 billion in the year 2011 which was recorded to be the highest increase in the history of the company. It was ascertained from the balance sheet and the cash flow statement that the net cash derived from the various operating activities increased substantially. A rise was also recorded in the assets of the company along with a sharp increase in the overall stockholder’s equity. The operating profit or revenue of the company is considered to be the fundamental source of capital for supporting its regular business functions. Therefore, the increase in the net cash from the other operating activities would prove beneficial for the company. The cash flow from the operations was determined to be $4.0 billion which again depicted an increase from the previous year that is 2010. The increased returns from the cash flows played a vital role in helping the company to increase their competencies along with attaining fresh competitive advantages. The net income of the company was ascertained to be $2635 million which showed an increase from the previous years. Therefore, it can be stated that the financial health of the company is quite favorable for its growth (Annual Reports, 2011). The financial position of the company IBM was also studied in order to obtain a clear picture of its financial health along with comparing it with Apple and Dell. It was found that the net income of the company increased to $14, 833 million and it recorded revenue of $99, 870 million in the year 2010. The revenue was also found to increase compared to the previous year. The net cash flow obtained from the operating functions was $19549 million but it depicted a negligible decrease from the previous year that is 2009. The total cash flow generated by the company was also recorded to be $ 96 billion which displays a strong financial position of the company. The balance sheet was also considered to depict a strong position with an increase in the assets, goodwill and receivables. Furthermore, there was an increase in the total equity as well. Therefore, the company has also been observed to command a strong financial health and proves successful in its business operations (IBM, 2010). Hence, a remarkable increase in the liabilities of Apple Inc. was observed in its balance sheets which become a concern as this would imply a decrease in the net income and revenue in comparison to the year 2010. Financial Health of the Company From the above comparison of the financial statements, it can be inferred that all the three companies displayed a strong financial condition. However, the net revenue of Apple Inc. was found to be low compared to the other companies. The cash flow of Apple was observed to be higher than IBM but Dell was the leader on the basis of revenue. The net income of Apple was again observed to be higher than IBM but lower in comparison to Dell. Therefore, it can be stated that Dell displayed a stronger position among the considered three companies. This implies that Apple Inc. has a stronger financial position compared to IBM but remains weak when compared to Dell. It was also revealed from the comparison of the financial statements that Apple commands a good management on its debt as well as equity measures. The company has been assessed to have adequate equity along with retained earnings which further implies that it is capable enough of funding its development. Technology This aspect has been attributed as the vital core competency of Apple Incorporation. The company excels in the field of development of technology. Its technology is regarded to be the most dependable and stable compared to other competitors. The company also invests heavily in the field of innovation. The company has initiated a tie with the products of Microsoft making their products more technologically developed than the others. In comparison, Dell and HP do not indulge much in inventions or innovations but offer products at a lesser price to the customers. The major disadvantage faced by Apple can be stated to be the price of its products that are comparatively higher than the other companies owing to their technology (Morillon, 2010). Production Processes Apple remained determined not to allow licenses to any external bodies of their operating system. This decision of the company has aided the foundation stone regarding the production procedure of its software as well as hardware (Morillon, 2010). Best Practice Apple is believed to integrate the best practices with latest technologies with regard to their products so as to make their products unique and to make certain of the security, quality and most importantly compliance. The company is known to carry out their functions according to the specifications of the industry along with the relevant laws. The company has been also stated to be incorporating the best possible environmental practices compared to the other companies (Morillon, 2010). Conclusion From the above analysis and discussion it becomes evident that Apple possesses a strong financial health. However, the comparison of its financial condition with the other two competitors reveals that although Apple has a sound financial health, it still cannot be stated as the leader in the industry. Dell was found to lead in terms of its financial position. The other aspects of the company were also explored which helped to gain an insight regarding the technological aspect, the best practices adopted by it and also its production processes. Conclusively, it should be noted that Apple is believed to conduct its operations according to the industry specifications and heavily indulges in innovation. References Annual Reports (2011). Fiscal Year 2011 in review. DELL. Apple Inc. (2011). Apple Inc: Form 10-K annual report. Edgar online, pp. 1-17. IBM (2010). Annual Report. IBM Annual Report archives. Lin, Y. O. (2005). Financial Analysis: Apple Computer Inc. Boston University, pp. 1-11. Morillon, S. (2010). Google, Microsoft, Apple and Amazon. Online Business Intelligence, pp. 1-10. Read More