FINANCIAL ANALYSIS

Apple Inc and Microsoft Corporation Analysis

Apple Inc and Microsoft Corporation Analysis

Introduction

This paper intends to analyze and compare the financial statements of Apple and Microsoft Corporation. This paper discusses the horizontal and vertical analysis of balance sheet and income statement for both companies respectively. Moreover, financial ratios are also discussed and compared for Apple Inc and Microsoft Corporation.

Today, companies look to be best used as a primary source of technology. Competition among leading companies is inevitable, which is why emerging technologies are key to the success or failure of a company.

Discussion

Balance Sheet Vertical Common Size of Apple Inc

Balance Sheet Vertical Analysis of Apple Inc

The balance sheet of Apple Company shows an increasing trend in their non-current assets. Total non-current assets in FY07 were 13.38% as the time passed by the company has increased it to 61.33% in FY11. Major portion of this increase is due to the heavy investment in equity and other investment which has increased from 0% to 47.79% by FY11. The PP&E of company has decreased by a very little percentage i.e 7.23% to 6.68%. On the other hand when we look at the current asset situation of the company, it has decreased by almost 50% in the span of 5 years. The current asset has decreased from 86.62% in FY07 to 38.66% in FY11. The major decrease was found in Cash and bank balances decreased from 36.9% to 8.43% and short term investment decreased from 23.81% to 13.87% in the span of five years, respectively. This decrease in current asset will definitely have an effect on the liquidity ratio of the company.

Apple's equity has improved; it has increased from 57% to 65.8% in last 5 years the main reason for this increase is due to increase in retained earnings of the company which suggest that the company has growth opportunities in near future as well. Other long-term liabilities has also increased from 3.5% to 8.6% and we can also see that Apple's current liabilities have decreased by 12% in 5 years tenure.

Balance Sheet Horizontal Analysis of Apple Inc

For Balance Sheet Horizontal Analysis, FY07 has been taken as base year to be compared with the subsequent years. It is observed that from FY01 till FY05 there has been a consistent growth in Property, Plant and Equipment of the company. The main reason of the increasing trend is that the company manufactured innovative products like new models of I-phone and I-pad, which were much liked by the target audience all over the world.

Apple has expanded his total asset by a very impressive rate in last 5 years. Major growth was found in apple's PP&E which has increased by over 400% compare to FY07 and goodwill which has increased tremendously compare to FY07. Company's Cash and bank balance has remained almost the same with a slight increase of 5%. If we look at the company equity side there is a high increase in retained earnings as well as in comprehensive ...