FINANCE

Financial Analysis of Apple Computer Inc

FINANCIAL ANALYSIS OF APPLE COMPUTER INC

Introduction

Is Apple Computer Inc., (Apple) growth sustainable? This is the research report on Apple's Year 2005 (September 24, 2005) financial statements to analyze its business and financial sustainability in comparisons with the industry giant Dell, Inc (Dell) Year 2005 (January 28, 2005). Below are the small introductions on Apple Computer Inc. and Dell, Inc.

Ratio Analysis

Let starts the research by gathering all the financial data of Apple and Dell for analyzing the business and financial performance for both companies, and draw conclusion to support the research findings.

Apple and Dell both had strong ROI above market average of 8% - 12%. They both gave investors much higher return comparing to the average market rate. Apple had a much stronger sales growth of 68% from Yr2004 to Yr2005 (mainly due to its iPod sales that craze the digital music players market) in comparison to Dell's growth of 18.72% from Yr2004 to Yr2005; and both companies in the same industry standard and particularly, Dell is much bigger in terms of assets and revenue. It was a very significant progress for Apple to be able to achieve the Net Income level with a slight fall short of 0.69% from that of Dell's.

By using the DuPont ROI Model, both companies show the same return on investment as compared to the general ROI model. Therefore, to make a more details comparison, I studied both companies' gross, operating, and net income margins for a more comprehensive assessment. Based on the calculation of Gross Margin, Operating Margin and Net Margin, computed based on the percentage of Net Sales for both Apple and Dell; we can see that Apple has a higher Gross Margin of 29.02% compared to 18.32% from that of Dell's. It shows that Dell in this case has ...