Financial Statement Analysis: Apple

981 words | 4 page(s)

Apple Inc. is a technology company that produces innovative technological products in the niche computer, telecommunications, mobile, and multimedia businesses. Primarily, Apple is considered to be a technology business although the aforementioned spheres are inherently the businesses that Apple engages in. The iPhone 5 release is the most recent event that effected the financial position of the company to which the stock sold off after the release of the phone into the market.

Apple under new CEO Tim Cook is seeking to build a CSR to incorporate as part of the corporate vision statement. Apple’s leadership under former CEO Steve Jobs did not have a CSR policy as Mr. Jobs did not formally believe in ‘do gooding’ or in being socially responsible. The most recent 10k report includes Apple’s business strategy which is product focused and does not include any investment into corporate social responsibility, which is in line with Apple’s core strategy under Steve Jobs. (Apple Inc., 2011)

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The auditor’s report revealed the use of underage labor at supply chain factories located in China. The violation of labor laws ostensibly was known to the Parent Apple company to which the supply chain vendors as well as the Apple factories in China that develop and make the iPhone for sale. The role of auditors is to check and confirm that the external and internal (financial & managerial accounting) accounting reports are accurate and reflect Apple’s true operations against SEC regulations as well as other federal laws and statutes. The report is significant to external investors, which is used to make investment decisions on the underlying company stock.

Apple as of February 28 has 939.0M shares outstanding.
Apple has 0 Preferred Stock Outstanding
Apple Inc. does not have any Additional Paid-In Capital

Apple’s IPO issued stock in 1982 at $22.50/share and had three stock splits since. The average price per share since inception is a moving average since 1982 and currently yields an average price per share of $219.75 over the 31yr history. However, Apple only issued common stock once in the history of the company, the IPO, and the price again was $22.50 per share at offering.

The total dollar amount of dividends declared in the most recent year reported is $2.493B declared in 2012. Apple does not general declare dividends as in paid dividends as part of normal business and shareholder operations.

Apple’s liquidity or ability to meet short-term obligations when coming due is measured by the current ratio which is 1.543, which means that Apple has short-term equity (including inventory) to cover 1.5 times current short-term liabilities. Apple’s quick ratio (which does not include inventory) is 1.20 which indicates Apple has 1.2 times short-term equity necessary to pay short-term liabilities. Any number above 1 indicates no immediate threat of not being able to meet short-term financing obligations should liabilities be called by creditors.

Solvency: Apple is currently solvent and is expected to remain solvent over the short-term and long-term. Apple’s overall asset management has net cash of $39.82B and total cash per share of $42.40. Apple’s debt management as measured by Total Liabilities has increased y/y but not at the accelerated pace of Apple’s Total Assets as measured y/y. Asset Management as compared to Debt Management remains net positive and is expected to continue as net positive going forward. Apple does not have interest expense outstanding as the company does not borrow from the financial markets.

Profitability: The Return on Assets (ROA) for Apple is 20.58%, the Return on Equity (ROE) is 38.41% and the Earnings per Share (EPS) diluted is $44.11. Apple is currently profitable as the ROA inclusive of all assets is above 20% and the ROE which is inclusive of all equity held in the company is just short of 40%, each is industry leading. The EPS of $44.11 is also industry leading.

Cash Position: Apple’s cash position as a measure of Total Cash Flow From Operating Activities doubled between fiscal year 2010 and 2011 and increased by $13.3M from fiscal year 2011 to 2012. Apple’s main driver of cash flow is from Net Income which is the profit per sale after removing the Cost of Goods Sold (COGS). Net Income is a function of all sales across the product line and product mix of Apple’s underlying business as well as the change in liabilities and adjustments to net income. Apple used the cash to pay out a dividend, and chooses to hoard the rest of its cash outstanding.

Apple is the industry leader and performance of Apple is exemplary compared to rivals across the computer, mobile, and multimedia business.

Apple does not observe socially responsible operating policies. Apple has been found in violation of labor laws and internal practices that exploit indirect labor hired in factories in countries outside of the U.S. Apple also does not contribute to environmental upkeep relative to the environmental contaminants of chemicals used to produce their products.

Apple has a number of unique opportunities such as the development of pipeline products, given the company’s outstanding cash position and industry reputation. The company is in the process of further capitalizing on these opportunities, however there are risks given the company’s former visionary is no longer in service to the company.

Current threats to Apple include industry competitor Samsung and Google whom each have increasing market share of Apple’s core markets. Apple’s potential internal threat is a lack of innovation and product malfunction given Steve Jobs is no longer with the company.

Apple currently has strength in financial status, operating performance and cash position. However, Apple’s Total Cash Flow from Financing Activities turned negative in 2012 whereas the figure was positive in the years proceeding due to the sale purchase of stock.

  • Apple Inc. (2011, September 24). www.sec.gov. Retrieved from http://www.sec.gov/
  • Chun, R. (2011, May 11). Retrieved from http://www.imd.org/
  • Yahoo!finance. (n.d.). Retrieved from http://finance.yahoo.com/ Balance Sheet&annual

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