Financial Analysis of Apple Inc

Introduction1

Company Overview1

Apple's Vulnerability to Financial Threats2

Financial Performance3

Financial Analysis3

Profitability ratio4

Asset Management4

Debt Management5

Liquidity ratio5

Stock Price Analysis5

Future Expectations6

References7

Annexure8

Financial Analysis of Apple Inc

Introduction

The paper provides financial analysis of Apple Inc which is considered to be the most publicly traded company of United States of America which has the market capitalization of $416.6 billion. Apple Computer, Inc. was incorporated on 3rd Jan 1977 in California. However, the company adopted the new name on 11th Jan 2007. The paper presents an overview of the company and financial performance in the past three years.

Company Overview

Apple Inc. is recognized as the world's largest company for the year 2012 and among America's leading Fortune 500 Company. It operates under the sector of computer hardware and equipment within the industry of electronic computers. The company has been designing, manufacturing and marketing within the following line of business: media devices, mobile communication, personal computers, and digital portable music players as their primary products which include iPhone®, iPad®, Mac®, iPod® and Apple TV® through online and retail stores. In addition to this, they have been selling operating software like iOS and OS X®, iCloud®, digital content software like iLife and iwork from the platform of iTunes Store®, App Storesm, iBookstoresm, and Mac with various other services and peripheral items including storage devices, printer and computer memory etc. The company has five market segments which include: America, Europe, Japan, and Asia-Pacific and lastly, retail.

Apple's Vulnerability to Financial Threats

Every business has to face financial threats whether it is in the form of economic downturn causing inflation leading to higher interest rates, or global competition. They are the changes in an external environment which creates a huge impact on company's performance referring to sales and financial stock markets, giving an opportunity for competitor to make profit. By reviewing the past performance of Apple Inc., during the recessionary period of the year 2009, it was identified that global recession successfully hit the retail performance of Apple as the ratio of visitors fell by 1.8 percent and the revenues declined 17.4 percent (MacNN, 2009). The economic downturn simply has its adverse affect on every business and their stocks. If Fed increases the interest rates the Apple stock will be most likely to suffer as the stock market typically rolls more towards a decline.

This is quite eminent with old phrase that one shouldn't fight with the Fed. As the company offers technology based products their aims lies on offering innovative products to consumers which has been their competitive advantage for so long. The company invests huge amount in research and development for this purpose. The vulnerability for getting affected by recession rises when sales drop down as consumers cut back their spending on such luxurious items which eventually reduces the revenue and further investment in R&D., which gives an opportunity to competitor firm to offer a better product in the market in comparison to Apple Inc. However, Apple has never let that happen by following an aggressive strategy of ploughing back cash ...