Financial Analysis of Apple Inc.

Topics: Apple Inc., Steve Jobs, IPhone Pages: 12 (3385 words) Published: December 26, 2013
Table of Contents

1.0 History……………….……………………………………………………..…………3 1.1 Invention of Apple……………………………………………….………………........3 2.0 Apple’s Current Position…………..………………………………………….……..3 2.1 Products, Product support and Services……………………………………………….3 2.2 Market Share and Distribution…………...……………………………………………4 2.3 Competition……………………………………………………………………………4 2.4 Research and Development……………………………………………………………5 3.0 Qualitative Analysis…..…..…………………..……………………………………5 3.1 Apple’s Business Model……………………………………………..………………..5 3.2Strategy……………………………………….……………...………………………...5 3.3 Corporate Governance………………………………………………………………...6 4.0 Quantitative Analysis………………………………….………….…………………7 4.1 Sales and Profitability…………………………………………………………………7 4.2 Liquidity and Financial Structure…………………………………………..…………8 4.3 Key Financial Ratios/ Indicators……………………………………………………....9 4.3.1 Short-Term Liquidity………………………………………………………………..9 4.3.2 Solvency Ratios…………………………………………………………………....10 4.3.3 Simulation Model…………………………………………………………………..10 5.0 Recommendation………………..…………………………………………………..10 6.0 References…………………………………………………………………………...12 7.0Appendix………………………………………………………………………..……13

1.0 History
1.1 Invention of Apple
Apple Incorporated was founded about 35 years ago. Founded by Steve Wozniak and Steve Jobs, Apple’s first invention was a simple computer put together by Wozniak, who was dealing with the situation as a hobby, and by 1977, the first personal computer with color graphics and a keyboard was presented as Apple II. Apple II boosted the sales from $3 million in the first year to $200 million in the next two years (Fell). However, by 1980, the competition in the computer industry has increased and that has caused the sales of the Apple computer to decrease resulting in a huge loss for the company. The next five years were hectic for Apple as Jobs tried to introduce the Mac as a home computer and then as a business computer; both trials of which failed. By 1985, Jobs resigned, left Apple and sold all his shares (Fell). Despite of Steve Jobs’ personal success in other companies such as NeXT Computer Co., Apple has decided to re-appoint Jobs to Apple’s board of directors. Furthermore, Apple announced a quarterly loss of $708 million in 1997. Following that loss, the chairman and CEO Gilbert F. Amelio resigned and Jobs took over as the CEO. At the end of 1998, Apple was able to make profit after several deals and tasks Jobs has accomplished. From there on, Apple has released many innovations and revolutionary products that have boosted its name and profits throughout the years (Fell).

2.0 Apple’s Current Position in the Market
2.1 Products, product support and services
Currently, Apple’s products and services have emerged since they first started. Their products include mobile communication such as the iPhone, media devices such as the iPad, personal computing products such as the Mac, and portable digital music players such as the iPod. Furthermore, what Apple managed to do was to merge several of these products resulting in new lines of the already existing products. For example, an iPhone now includes a web browser like the Mac and a music player like an iPod. All these products run on Apple exclusive operating system software (iOS) that is always updated with the latest technology (Inc., 2012). Other services offered by Apple include an online store (iTunes Store) that allows the customers to buy movies, music and books and another online store, Mac App Store that allows the customers to download, purchase or rent digital content or applications. Finally, a recent service offered, is what is known as iCloud. This is simply a virtual service that allows the customers to store any type of file (pictures, music, digital documents, etc.) all on a ‘cloud’, which can be accessed at anytime and anywhere (Inc., 2012).

2.2 Market Share and Distribution
Throughout the years, Apple Inc. has created a wide range of customers through making its product as readily...

References: Apple. (2013). Proxy Statement. California: Apple Inc.
Austin, S. (2012, March 19). How Apple’s Dividend Yield Stacks Up Against Others . Retrieved April 1, 2013, from Wall Street Journal: http://blogs.wsj.com/digits/2012/03/19/how-apples-dividend-yield-stacks-up-against-others/
Fell, J
Gupta, J. A. (2013, Feb 7). Einhorn sues Apple, marks biggest investor challenge in years . Retrieved March 30, 2013, from Reuters: http://www.reuters.com/article/2013/02/07/us-apple-greenlight-idUSBRE9160MI20130207
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