Financial Analysis Report Apple Inc.

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Executive Summary

Apple inc.,incorporated in 1977 (40 years ago), designs, manufactures and markets personal consumer electronic devices worldwide and provides online services; complementary and independent to its device portfolio. Over its lifetime, Apple’s portfolio of devices and online services has expanded and diversified, yet a huge part of the company’s revenues come the marketing of its iPhone devices.

The smartphone market, which Apple joined in mid-2007 with the introduction of its first generation iPhone, has grown exponentially since 2008, and is populated by many competitors, namely, Samsung, LG, Lenovo, HTC and more. In addition, Apple offers a variety of products such as tablets, laptops and other devices which can be used independently and better yet, can operate in sync with the other products in Apple’s portfolio, which creates a stickiness for the consumer to its products. Apple’s online services grew significantly and is now competing in the online music and software industry as well. Apple doesn’t only serve the consumer directly, but also markets to educational and government institutions, and corporations.

Apple is well known maintaining low cost manufacturing and selling at margins unseen in the industry which leads to hoarding of an immense amount of cash. Although operating margins peaked in mid-2013 at 35.7%, the margins have since declined due rising operating costs which comes mainly from research and development increase, and difficulty to maintain low manufacturing costs due to tough competition in the technology development aspect. Still, Apple is sitting on $16.7 billion cash and cash equivalents, the majority of it remains abroad and is not expected to return the U.S anytime soon due to taxation.

Apple’s revenues increased since 2012, yet, 2016 showed that revenues hit what analysts call an inflection point. Its famous growth is now questioned by analysts and bloggers and is yet to be seen if the company remains a growth stock or has become an ‘old tech company’ like many other large high tech companies.

Table of Contents

1. Company Analysis…………………………………………………….……….

1.1 Apple’s Industry and Structure…………………………………………………..page 4-5

1.2 Apple’s History and Main Products……………………………….…...……......page 5-6

1.2.1 The Industry and Apple’s Main Competitor…………………………………..page 7

2. Analyzing the financial statement…………….…………………….…........

2.1 Financial Statements ……………………………………………............page 8

2.2 Common sized Balance sheet………...………………………………….page 9

3. Financial Ratio Analysis………………………………………………............        

3.1 Liquidity ratios……………………………………………………………….....page 10-11

3.2 Profitability ratios……………………………………….……………………...page 11-13

3.3 Capital structure ratios…………………………………….…………………....page 13-14

3.4 Efficiency ratios…………………………………………………………………page 14-15