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Apple Inc Financial Analysis

Project Report of Apple Inc

  1. A description of the company defining its main and secondary lines of business, key management, stock symbol and SIC code.

Solution:

Apple Company develops, create and advertise different media devices and mobile communication and different computers for the users and for different size of business. Company also provide different things like software, accessories, network solution, services, application and third party digital content, offering different iPods, iphones, a line of desk top, portable personal computers and MAC. This company also develops different operating system including tvOS, iOS, watchOS and macOS. It also offer different application software like Filmmaker pro, Logic pro X and Final cut pro. If present iCloud service, Applecare, Apple play and different applications which provide different facilities to consumers.

Primary SIC code of company is 8742- Management Consulting Services.

The stock symbol of company is 174.96 USD = 0.82(0.47%) Open 174.78, High 175.84, Low 173.85, Mkt cap 86.13B, P/E ratio 17.11, Div yield 1.44%, and prev close 174.14.

Apple Inc Financial Analysis

The key management of company include Ms. Angela J. Ahrendts (Sr. VP of retail), Mr. Daniel J. Riccio (Sr VP of hardware Engineering), Mr. Timothy D. Cook (CEO and Director), Mr. Ron Okamoto (Head of developer relations) and Mr. Luca Maestri (CFO & Sr,VP).

  1. Income Statement Analysis:

201720162015
Total revenue229234000215639000233715000
Cost of goods sold1410480013137600140089000
Net profit483510004568700053394000

As per given data, in 2015 apple company has high ratio of revenue as compare to 2016 and 2017. But the cost of goods sold of 2015 is higher than 2016 but low as compare to 2017. In 2015 net profit of company also higher as compare to 2016 and 2017 because high revenue incurred in that year. So 2015 is highest profit generate year for Apple Inc. But in 2017 a visible improvement we can seen in the revenue and net profit.

  1. Balance Sheet Analysis:

201720162015
Current assets12864500010686900089738000
Total assets375319000321686000290345000
Total liabilities241272000193437000170990000
Total stockholder’s equity134047000128249000119355000

Current assets of Apple Company are going to increase year by year and in 2017 it has highest value of current assets. In total assets, a drastic change can be observe as compare to previous year and in current year 2017. According to total liabilities, normal increment is happen in the values according to current condition of company. Equity also increases in 2017 of Apple Company as compare to previous years.

  1. Statement of Cash Flow Analysis:

2017201620153 year total
Cash flows from operating activities635980006582400081266000211048000
Cash flow from investing activities-46446000-45977000-56274000-148697000
Cash flow from financing activities-17347000-20483000-17716000-5554600
Change in cash-195000-63600072760006445000
Ending cash20289000204840002112000061893000

Cash flow from operating activities show that in 2015, high amount was enter in the company which is beneficial for the company, but in 2017,and 2016 less cash enter in the company. According to investing activities, less investment occur in 2017 and 2016 as compare to 2015. Financing activities show that more financing is going to happen in 2016 as compare to other years. Positive cash only appear in 2015 because of high intake of cash and ending cash of company show a normal different between these years of company. 

  1. Ratio Analysis:

ratio2017201620153 year average3 year industry average
Current ratio128%135%111%124.6%N/A
Cash ratio74%85%52%70%N/A
Gross profit margin 38%39%40%39%44.36%
Operating profit margin27%28%30%28%23.21%
Net profit margin21%21%23%21.6%17.01%
Return on asset0.120.140.180.14N/A
Return on equity0.360.350.440.38N/A
Total asset turnover0.610.670.800.69N/A
Days sales outstanding6 days7 days8 days7DaysN/A
Day’s inventory13 days6 days6 days8.3 daysN/A
Debt ratio0.720.580.440.58N/A
Time interest earned ratio4.073.913.793.92N/A
Price/earnings ratio18.91N/AN/A18.9115.31
Market to book ratio0.95N/AN/A0.954.21

Cash and current ratios are profitable in 2016 of Apple Company. Gross margin is high in 2015 but going to increase in coming next two years. Operating profit margin is also following the pattern of gross margin. Net profit margin is low and same in 2017 and 2016 but high in 2015. Return on asset and return on equity both low in 2017 but high in 2016 and 2015 of Apple Company. Total asset turnover is also low in 2017. Debt ratio and time interest earned high in 2017 present that in 2017 company is taking more debt and do less production and sales.

  1. Using the company beta, discuss the riskiness of the company relative to market.

Ans. Company’s current beta is 1.10. This is higher than market risk which is 0.95 according to estimation of company. So beta show that company has enough capacity to bear all the risks which may appear in the market because its risk facing power is much higher than market and it can survive in the market in the worse condition due to its safe zone.

  1. Write summary on recent articles concerning your firm.

Ans. In one article, it’s clearly mention that apple hire new head of machine learning, which show that apple want to improve its performance of machinery and get more knowledge and skills related to improving in our all technologies machinery like mobiles, iPods etc. in second article, company is try to manufacture chips instead of using Intel chips. It give more value to company and more supportive working provided when own manufactured chip is going to install in all the devices of company.

  1. Based upon your review of company, provide your opinion on the future performance of company.

Ans. Apple is most renowned and famous company in the international market. It provides all sorts of devices and application and program which become part of life of every person. As per given data of last three years of company, we can observe that in 2015, the performance of company is very good, it profits and balance sheet present a good position of company but in 2016 it going to decrease and it performance become slow but again in 2017 it going to improve but with a very little increase which higher as compare to 2016 but still low as per 2015. 2017 data also show that company using more debt financing which increase its debt and interest this thing is not too much favorable for the company but overall performance of company in 2017 is good and it can be assume that in next up coming years its prices going to high and its profitability going to increase which a positive change.

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