Fin/419 Working Capital Strategies Paper

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Working Capital Strategies
FIN/419
December 10, 2012

Working Capital Strategies
In the last decade Apple Inc. has yielded exponential growth. As a company, the imaginative and invocative approaches of technological product advancements have enable Apple, Inc. to achieve an elite status among technology companies throughout the world. Apple, Inc. serves as an inspiration to many companies through higher benchmark standards they created. Though their product margin is not as vast as most technological competitors, Apple, Inc. innovates and releases a new product to consumers. Apple, Inc. has proven to able to move and create new markets with one product that allows Apple, Inc. to rain as the elite player in technology. This paper will review Apple, Inc. most recent financial reports such as balance sheets, statements of cash flow, management comments, and footnotes to financial statements, to explain how each current asset and liability account has affected cash management strategies. This paper also includes an assumed forecasted revenues increase of 20% for 2013. As a stakeholder, shareholder, or investor the ability to gain a brief, yet fundamental understanding of Apple, Inc.’s operational controls in reference to their current assets and liability accounts through the information provided in Apple, Inc.’s 2012. Financial reports, such as the company balance sheet as well as statement of cash flow with the intent to study the effectiveness of the companies cash management strategies serves as an essential piece toward the decision-making process of a company to encourage and enhance a company’s leveraged growth while enhancing the companies strength and longevity from September 23, 2011 through September 28, 2012. Apple, Inc. has seen a strong leveraged growth, in the company’s balance sheet; the balance sheet shows that from 2011 to 2012 Apple, Inc.’s total current assets have increased 22% from $44,988,000 to $57,653,000, all numbers in thousands ("Apple Balance Financials," 2012). The largest growth is found in Apple, Inc.’s net receivables that increased 35% from $13,731,000 to $21,275,000, all numbers in thousands ("Apple Balance Financials," 2012). Apple, Inc. yielded growth in all assets, cash, and cash equivalents, short-term investments, net receivables, and other current assets. The strength of Apple, Inc.’s current assets enables the company to have strong solvency eliminating the need for acquiring long-term debt. Liabilities such as accounts payable and other current liabilities are inevitable as more business revenue requires a higher rate of expenditures to collect on the additional increase in sales. By having strong current asset versus liabilities Apple, Inc. can fund new projects, ventures, and fund research and, according to the need of the company without destabilizing the company’s financials. Assuming that Apple, Inc. will continue its current growth to an average of 20% for 2013, it is apparent that an increase in the company’s expenditures will also increase. However, as the past has noted, Apple, Inc. consistently provides stakeholders, shareholders, and investors a positive return on their investment. Working capital is the lifeline for all companies. With Apple Inc’s strategy to expand into colleges and high schools with the iPad text book, the capital needed for the investment and to maintain the production is massive. The revenues for 2013 are forecasted to increase by 20%. This comes at the right time for Apple Inc’s plan to tranche deeper into the scholastic arena. Without an increase in revenues by 20%, Apple has $19,111,000 in working capital, year to date September 2012. Due to the forecasted increase with revenues, the recommendation is to proceed with the investment into the scholastic arena given the strength of the working capital and return on investment. There is only a slight increase in operating cost due to the additional investment.

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