Uses Of Business Financial Statements By Various Stakeholders

Topics: Balance sheet, Generally Accepted Accounting Principles, Financial ratios Pages: 7 (1393 words) Published: April 24, 2015


FINANCIAL ANALYSIS OF APPLE COMPANY
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Introduction to Apple Company

Apple Inc. is a California corporation. The company was established back in 1977. The main objective of the company is manufacturing and marketing of personal computers, media and mobile communication devices, portable digital media players, variety of related software, provision of network solutions and marketing of third party applications and content. The company also deals with the distribution of the third party products which are compatible with company products. The third party products involves both hardware and software products. Majority of the company products can be accessed and purchased through the various online stores as well as their website.

Methods used to account for assets, liabilities, and shareholder equity by Apple Company

Apple companies follow GAAP accounting techniques. Apple uses straight line differentiation principle or method account for its tangible property. Intangible assets are amortized for over considerable life time. The company uses the principle of subtracting total liabilities from the total assets. The alternative method which provides the same results involves calculating the capital share in addition to the retained earning followed by subtracting treasury shares. The company accounting policies are similar to the ones applied by the major competitors HP and Dell companies. Apple recognizes any expense once it has occurred. The company adopts FIFO technique when accounting for the inventories. Apple uses expenses manipulation deals when estimating warranty. Since the company was established, the companies allocates two 2% for the net sales to cater for the warrants. The company’s investment opportunities available for offer securities are reported at a fair value.

Approach taken by Apple Company towards its internal controls

Apple is confined within GAAP and portray a key factors which can be attributed the success attained by the company. Apple believes in investing heavily on investment and new technology. Despite their internal control of continuous investment in innovations the company is forced to expense the cost as they are incurred. Apple Inc. internal controls aims at consolidating financial statements and the key management. The controls involve adopting key accounting principles and estimates which are related to allowances for doubtful accounts, revenue recognition, inventory evaluations and purchases commitments. In addition, the polices help in valuation for long lived assets including those assets which are intangible, income taxes and warrant costs. The internal control is considered very crucial because they act as the foundation of representing company’s financial position. The controls are taken as fixed factors which are the key strategies used by the company to outrank all of its competitors. Apple Company fully complies with the set Sarbanes-Oxley Act of the year 2002. Financial ratios

Liquidity analysis
The liquidity ratio is very crucial to companies since it is used to measure the company’s ability to cater for its short term obligations.

By 27 Sep 2014
By 28 Sep 2013
Current ratio
1.08

1.68
Quick ratio
0.82

1.40
Cash ratio
0.40

0.93
Sourced from the financial statement
The liquidity ratios of the apple company deteriorated significantly from 2013 to 2014. The liquidity ratios of apple are more than the average industry ratio which indicates that the company has a stable short term liquidity position. The differences of the liquidity ratios are less in the apple company compared to that of the industry. With low differences in the liquidity ratios shows that the company inventory stock is also low. Debt analysis

Debt ratio is a very important measure of organization or company financial position as well as determiner on ability to meet financial requirements over the outstanding...

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