The report highlights on the overall performance of Apple Inc. The report is prepared for evaluating whether One World Investment can make an investment of $20 million in Apple Inc.’s shares. It elaborates the strategies that are executed by Apple for the operation of their business in the changing world of management. The financial performance of the company elaborates the fact whether the company is suitable for investment of $20 million in their shares. It can be evaluated through the share price movement of the company for the last five years. Ratio analysis is a very important technique to evaluate the financial status of a company. The profitability, liquidity and solvency of the company are noted so as to check its stability. The Dupont analysis is carried out to check the change in Return on Equity over the years. The future investment potential of Apple is also evaluated by examining the market share of the company, human resource management of the company, considering the products and revenue and also the customer service. Finally the recommendations are made whether to make the investment of $20 million in the company or not after the evaluation of Apple Inc.
Apple Inc. and the wholly-owned subsidiaries which is collectively known as Apple focuses in designing, manufacturing and marketing mobile and media devices. It also markets personal computers and digital music players. It also engages itself in selling a range of software, peripherals, services and provides networking solutions.
Apple sells its products worldwide through the retail stores that it had opened in various parts. Other than retail stores the company has also set up online stores and have sent direct sales force so that it can reach every parts of the world. The customers of the company are mainly the consumers, educational institutions, government and mid and small sized businesses.
Apple Inc. has provided its customers with the best experiences by providing them innovative hardware, peripherals and hardware. The company’s business strategy highlights it’s unique ability of developing and designing operating systems, application software, hardware and the services for providing their customers new products and means of solution with innovative designs and ease of use. The company aims at constantly investing in marketing, advertising and research and development. It helps in developing the process of manufacturing and the techniques of selling the innovative technologies and products. Concentrating on the strategies the company have continuously expanded its platform by delivering and discovering third party digital contents and applications via its iTunes Stores.
The company has also allowed its customers for discovering and downloading books and applications through the “Windows-based computer or through iOS devices” (Yahoo! Inc, 2014a) known as iPad, iPhone and iPod touch. The company has established Mac App Stores in January 2011 for providing their customers easy download or install applications for the Macs that they own. Apple supports the community which helps in development of third party hardware and software products along with the digital content that complements the offerings of the company.
One of the most important strategies of the company includes the expansion plan for reaching more customers by extending its distribution channels. The company also plans for increasing the quality of products to increase their sales and provide the customers with post purchase services and avoid post purchase resonance.
The financial performance of the company includes the following:
1) Analysis of the Income statement for 2010 and 2011
2) Analysis of the Balance Sheet for 2010 and 2011
3) Ratio Analysis showing the profitability, solvency and liquidity position of the company.
4) Share Price Movement for the past 5 years
Figure 1: Income Statement of Apple Inc. for 2010 and 2011
From the above Income Statement for the years 2010 and 2011, it can be identified that the sales has increased in 2011 by 65% from the previous year. Thus, it can be said that the products and services of the company has been preferred by the customers and they have proved their loyalty to the brand by purchasing the same branded products over and over again. The increase in sales has lead to the increase in gross margin of the company. Thus, there has been a huge growth in the total net income if the company in 2011 in comparison to 2010. The earnings per share of the company have also increased since the net income of the company has increased. This has benefitted the shareholders of the company and has given them the scope of earning more than the previous year.
Figure 2: Balance Sheet of Apple Inc.
The balance sheet presented above depicts the financial position of the company. It indicates the fact that the current asset of the company has increased in 2011 from 2010. The inventory of the company has decreased which indicates that the sales have increased over the years. Thus, it can be inferred that the company has been in a profitable position in 2011 as compared to 2011. Another important element of balance sheet that forms an important part of the company’s financial strength is the current liability. The current liability is identified to be lesser than the current asset of the company which is indicative of the fact that it has enough cash and cash equivalents for financing the obligations.
The following table elaborates the result obtained from the ratio analysis of Apple Inc. (Refer to Appendix 1 for calculation) (Yahoo! Inc., 2014b: Yahoo! Inc., 2014c).