Apple analysis

Apple analysis

Introduction

Apple Inc, which was previously known as Apple Computer Company, is a well-known American multinational company whose headquarters is situated in Cupertino, California. The company is well known for manufacturing and creating innovative electronics items, computer software, and personal computer (Apple, 2012). Along with these, it is also known for endowing words with innovative hardware products like iPod, iPhone Smartphone, tablet computers and others.

Apple Inc is the leader of American technological industry and due to its quality products and services it has become the world's second revenue generation company of IT industry, and third largest mobile developer after Nokia and Samsung. Since, the beginning of twentieth century Apple has accomplished phenomenal growth and this is visible from the fact that American popular magazine “Fortune” has named Apple as the most accepted company of the country in year 2008 and of the globe since 2008-2012. Furthermore, company has recently snatched the crown of globe most valuable brand in Omnicom report of “best global brand”.

It is evident from the fact that the company is continuously involve in improving the standard of its product and service and to give stiff competition to its close competitors like “Microsoft, HP, Samsung and various others” (Apple, 2012).. The next section of this report would provide an in-depth analysis of company financial health using horizontal analysis and ratio analysis and would provide recommendation of how company can further improve its position

Discussion

Horizontal analysis

Horizontal analysis of company financial statement comprises of interpreting ratios of the company, benchmark, or figures from preceding years. In normal financial terms, this tool is also referred to as trend analysis and it enables the evaluation of certain changes that have occurred in various elements during the passage of time (Goh & Ryan, 2008). Moreover, it also enables the management of the company to analyze the change in performance of revenues, expenses and other important element during the course of period. On the other hand, analyst can use this method in two ways i.e. absolute comparison or percentage comparison for any item of the income statement, balance sheet or cash flow statement of the company.

Horizontal analysis of Apple Income Statement

There is no denying the fact the apple has perform exceptionally well over last decade particularly in last five years. The exceptional performance of the company was evident from the horizontal analysis of its income statement during the period of 2011-2013, for instance, in year 2012 total revenue of the company increase to 45 percent, and around 9 percent increase was observed in year 2013(Heeley & Jacobson, 2008). This increase in revenue clearly indicates that company has not only able to increased the sales of its existing product but its new products and services has been accepted by its loyal customer and are trading well in the market.

Despite of such phenomenal growth, development of new products and expansion, company has managed to reduce its cost of sales, for instance in 2012 its cost of sales increase to 36 percent ...