Professional Financial Analyst



Professional Financial Analyst

Overview of the Apple Inc

Apple Computers is considered to be the creator of the personal computer and much more. One relegated to a niche, hobbyist computer manufacturer, Apple Computers has matured into a media powerhouse with its long tentacles in every aspect of the business (Apple Inc Annual report 2011). Apple Computers plays a major role in the consumption (iPod and Mac) and distribution (iTunes Store) of music, once thought to be the exclusive domain of giant record tables. Since January 2010, the company operates through its 284 retail stores in ten countries, and through an online store selling both hardware and software. Among the products of hardware known to the company has teams Macintosh, the iPod, the iPhone and the iPad (Apple Inc Annual report 2011).

Among the software Apple deal with operating system Mac OS X, the operating system IOS, the media browser iTunes, the suite iLife (multimedia and creativity software), the suite iWork (productivity software), Final Cut Studio (a suite of professional video editing), Logic Studio (audio editing software on audio tracks) Xsan (software for exchanging data between servers), Aperture (RAW image editing software), and the web browser Safari (Apple Inc, 2012).

Over view of the Microsoft Corporation

Microsoft strengthened its position in other markets such as operating systems and office suites, with resources such as cable television network MSNBC, the premier Internet MSN and multimedia encyclopaedia Microsoft Encarta, product and service cancelled by the company in early 2009 due to competition from the free Wikipedia (Microsoft Corporation Annual Report, 2011).

Reason to choose these companies

The reason to selecting these companies is due to the highest generating revenue in their industry and because of the following reasons which made them successful across the world:

Apple Inc

Microsoft

Ability to quickly adopt new technology

User friendly products

Effective advertising and branding

Development of new products

Effective cost controls

Large instalment base

Strength in export markets

Intellectual property protection

Offering a “one-stop shop”

Having a diverse range of clients

Financial Statements Comparison

Ratios Analysis

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.

Profitability Ratios

Apple Inc

Microsoft

Ratios

Profitability Ratios

2011

2010

ROA % (Net)

27.14

21.78

ROA % (Net)

23.77

22.88

ROE % (Net)

41.79

37.16

ROE % (Net)

44.84

43.76

ROI % (Operating)

54.47

48.76

ROI % (Operating)

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 (Microsoft Corporation, 2012). 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 ...