Apple Inc Financial Analysis

Topics: Financial ratios, Financial ratio, Inventory Pages: 7 (1705 words) Published: December 6, 2010
Apple Computers
For Fiscal Year Ending December 31,2010

Apple started in Steve Job’s bedroom when Jobs and Steve Wozniak began work on the Apple I. Since it’s start Apple has had it’s ups and downs and today has come out on top.
Apple designs, manufactures and markets a range of personal computers, mobile communication and media devices, and portable digital music players, and sells a variety of related software, services, peripherals, networking solutions and third party digital content and applications.

Apple is constantly changing and adapting to what consumers ask for. They have an innate ability to sense what the market wants and seize the opportunity to be the first to offer said product.
Apple did not start in a competitive market, however this changed as the 1980’s need for PC’s grew to not only just businesses but to schools. Through the last thirty years demand for PC’s has steadily increased, as a result, Apple steadily attempts to change as the demand for new programs, products and utilities increases. There have not been any stated legislation and regulation issues for Apple, however they as a company have had to hire other companies to provide processors, software and operating systems. Which lead to them contracting others such as Microsoft to create and operating system for their computers. This leads to more competitor threat due to other computer makers soliciting the companies used by Apple. More currently the company had to appeal to major record labels, recording artists and phone suppliers to sell their products or invest in them. Apple has had a significant impact on our technological business. Products such as the IPhone, IPod, IMac and most recently the IPad have all stemmed out of customer demand for particular products to perform specific duties, either in the workplace, home or school.

As of September 25, 2010 Apple had approximately 46,600 full time employees and an additional 2,800 part time employees and contractors.
It is believed that Steve Jobs is the key to Apple’s success and without him there are worries that Apple will not thrive as it has been under his reign.

Business Strategy:
Apple’s business strategy is to bring the best user experience to its customers through its innovative hardware, software, peripherals, services, and Internet offerings. Apple leverages it’s unique ability to design and develop it’s own operating systems, hardware, application software, and services to provide it’s customers new products and solutions with superior ease of use, seamless integration, and innovative industrial design. Apple believes in continual investment in research and development and that these factors are critical to the development and enhancement of innovative products and technologies.

Financial Position:

Current Ratio
Current Ratio= Current Assets/ Current Liabilities
41,678/20,722= 2.01times
With a ratio of 2.01, creditors would know that a company could meet its liabilities. This means that Apple has $2.01 in current assets to every dollar in liability.

Quick Ratio
Quick Ratio = Current Assets-Inventory/Current Liabilities
41,678-1051/20,722=40627/20722=1.96 times
The desired quick ratio is usually at least 1.1, which means that Apple’s quick ratio of 1.96, is more liquid.

Cash Ratio
Cash ratio =Cash/Current Liabilities
51,011/20,722=2.46 times
The cash ratio is another way for creditors to determine liquidity. This means the company has enough cash to pay for its supplies.

Net Working Capital to Total Assets
Current Assets-Current Liabilities/Total Assets

Inventory Turnover
Inventory Turnover= Cost of Goods Sold/Inventory
39,541/1051=37.6 times
With the industry average for inventory turnover being 11.51 ( Apple is far over that with 37.6 times meaning their inventory does not sit around for long.

Days Sales In Inventory
Day’s Sales...
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