Apple Financial Analysis 2

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Company Analysis - Apple

TABLE OF CONTENTS

COMPANY OVERVIEW5 Introduction5 Brief History & Current Happenings5
Apple Products & Services7
Business Strategy9

INDUSTRY ANALYSIS10
SWOT Analysis10
Industry Overview13

FINANCIAL ANALYSIS16
Short-Term Liquidity Analysis16
Current ratio16
Acid Test (or Quick Test Ratio)16
Accounts Receivable Turnover17
Inventory Turnover17
Days in Sales Receivables17
Days in Inventory18
Days Purchases in Account Payable18
Average Net Trade Cycle18
Cash provided by operations to average current liabilities18

CAPITAL STRUCTURE AND SOLVENCY RATIOS ANALYSIS19
Long term debt to assets19
Debt Ratio19
Earnings to Fixed charges20
Cash flow to fixed charges20
Financial leverage index20
Altman Z score20

PROFIT MARGIN RATIOS ANALYSIS21
Gross profit Margin21
Net Profit Margin21
Operating Profit Margin22

RETURN ON INVESTMENT RATIOS ANALYSIS22
Return on Assets23
Return on Common Equity23
Equity Growth Rate23
Disaggregation of Return on Common Equity23

ASSET UTILIZATION RATIOS ANALYSIS24
Accounts Receivables Turnover25
Inventory Utilization25
Fixed Asset Turnover26
Other Asset Turnover26
Total Asset Turnover26

FINAL RECOMMENDATION27

BIBLIOGRAPHY28

APPENDICES29

Executive Summary

This report serves as an analysis of a leading company in the computer manufacturing industry. Apple is presently within the top five positions for being one of the top computer manufacturing companies in the world. Currently, it holds 5.8% of the market share and leads the market in fourth place. The company is making strides toward achieving success in the industry, more specifically in the consumer electronics market with the creation of the new iPhone.

In this report, Apple's financials are analyzed for the years 2002 through 2006. These figures are compared to their main competitor, Hewlett Packard, which is the industry's top leader. In addition, also included in this report is an in-depth look at the computer manufacturing industry: trends, changes and innovations that are affecting Apple and its competitors.

With consolidation becoming the latest development in the computer manufacturing industry, competition to Apple's 4th place position is intensifying. Apple hopes to become a larger entity and lessen the risks of a homogeneous product offering to consumers by diversifying its product lines.

By the end of this report, an insightful perspective on the financial performance of Apple and their future success or failure in their industry will have been provided.

Introduction
Apple is one of the largest suppliers of computers – holding 5.8% of the market. Although computers are still an important part of its product mix, music-related products are currently at the top of Apple's playlist. The company scored a runaway hit with its digital music players (iPod) and online music store (iTunes).

Brief History and Current Happenings
Apple was founded on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. The first computer manufactured by Apple, Apple I, was hand-built by Steve Wozniak in the living room of Job's parent's home. It was sold as a mother board equipped with a CPU, RAM and basic textual-video chips.

On April 16, 1977, Apple II was introduced at the First West Coast Computer Faire. Despite a price higher than competitors, it quickly surpassed its two main rivals, the TRS-80 and Commodore PET, to become the market leader. Apple's market advantage stemmed from its...
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