FINANCIAL ANALYSIS

Financial Analysis: Apple and Microsoft

Financial Analysis: Apple and Microsoft

Introduction

In this paper, we are going to analyze two U.S based companies which are categorized as one the most feasible organizations to invest money. The investments in these companies are done through the purchase of stocks. The below report shows a complete analysis and overview of the two chosen U.S based companies. The companies which are being selected are Apple incorporations and Microsoft.

Over view of the Companies

Apple Inc

Apple Inc. is a company headquartered in Cupertino, California (United States), the computer and consumer electronics, as well as operating systems and application software produces. Apple was in the 1970s of the first manufacturers of personal computers and contributed to its spread. The commercial introduction of the graphical user interface and the mouse in the 1980s, Apple took a leading role. With the advent of the iPod in 2001, the iPhone in 2007 and the iPad in 2010 Apple expanded its business gradually to other product ranges. Apple is also involved with the iTunes Store and the App Store two of the world's largest distribution channels for digital goods. According to the market research company Millward Brown, the Apple brand with a value of around 183 billion, U.S. dollars, and the most valuable brand in the world. In terms of market capitalization, Apple recorded the list Financial Times Global 500 (for the first time in September 2011) in June 2012 the most valuable company in the world.

Microsoft Corporation

Microsoft Corporation is a multi -origin, founded on April 4, 1975 by Bill Gates and Paul Allen. Dedicated to the field of computer science, is headquartered in Redmond, Washington, United States. Microsoft develops, manufactures, licenses and produces software and electronic equipment, and its products used the operating system Microsoft Windows and the suite Microsoft Office, which have an important position among personal computers.

Financial Statement Analysis

Profitability Ratios

In order to see financial position health of Apple Inc we have calculate Ratios which is considers a good way to evaluate the performance of the business and identify problems. The following ratios have been compared the ratio of Microsoft corporation.

 

Apple Inc

Microsoft

Profitability Ratios

2011

2010

2011

2010

ROA %

27.14

21.78

23.77

22.88

ROE %

41.79

37.16

44.84

43.76

ROI %

54.47

48.76

44.85

49.47

The profitability trend of the Apple Inc is steadily increasing while Microsoft corporation profitability trend is somewhat partially increasingly. ROA of Apple Inc in 2011 is 27.13 while previously it was showing value of 21.78. Hence, company is managing to overcome their weakness. This is a strong point of the Apple Inc While ROA of Microsoft Corporation it has increased from 22.88 in 2010 to 23.77 in 2011. Apple and Microsoft ROE have shown improvement. As far as ROI is concern, Apple Inc has increased their investment due to profit face in last few years. Increasing the level of this index indicates higher efficiency of capital employed. This is a signal to shareholders that the company actually uses its resources like Microsoft Corporation. That is why when a new issue of shares (stocks) should pay special attention to the level of this index and its ...