Apple Company’s Key Financial Metrics Evaluation

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Introduction

Apple Inc. is among the largest tech companies in the world, with products ranging from software to hardware. The company’s history and background are well-known due to the high popularity of its founder. Apple Inc. was selected due to personal interest and curiosity. The given analysis and assessment will primarily focus on Apple’s company description, background, and industry, as well as its recent critical financial metrics evaluation, such as mean, range, and standard deviation.

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Company Description

It is important to note that Apple Inc. is a tech company that primarily specializes in the development and manufacturing of hardware devices but also utilizes its own software platforms exclusive to the brand. In sum, “Apple Inc. designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories, and sells a variety of related services. The corporation’s products include iPhone, Mac, iPad, and wearables, home and accessories” (Reuters, 2021, para. 1). In other words, the overall categories of product lines are diverse and expansive, where the emphasis is put on both performance and design with an accentuation on customer experience. In addition, Apple Inc.’s services involve “advertising, AppleCare, cloud services, digital content, and payment services” (Reuters, 2021, para. 1). The target customers are comprised of “the consumer, small and mid-sized business, education, enterprise, and government markets” (Reuters, 2021, para. 1). The company’s chief executive officer or CEO is Timothy D. Cook, and the executive leader and chairman of the board is Arthur D. Levinson. The headquarters is situated in Cupertino in the state of California, United States (Reuters, 2021). Apple Inc.’s CFO, COO, and vice president are Luca Maestri and Jeffrey. E. Williams, and Kathrine L. Adams, respectively.

Company Background

Apple Inc.’s background can be best reflected in its history since its foundation by two young individuals. The company was founded on April 1, 1976, by Steve Wozniak and Steve Jobs in a business partnership with Ronald Wayne (Rawlinson, 2017). The first computer was developed by Wozniak during the year 1975, prior to the foundation date, and the company name came from Jobs’ inspiration after he returned from an apple farm (Rawlinson, 2017). It should be noted that Apple Computer was incorporated in 1977 when Mike Markkula invested in the company the sum of $250000 (Rawlinson, 2017). One of the major successes for the company was the release of the Macintosh in 1984. Later, one of the biggest hits of Apple Inc. was in 2007, when the company was no longer solely focused on computers, transitioned towards consumer electronics, and launched the first iPhone (Rawlinson, 2017). In 2007 and 2008, the organization consecutively launched iTunes Store and App Store (Rawlinson, 2017). In 2020, the company reached a market value of $2 trillion, making it the most valued corporate entity in the history of the United States (Rawlinson, 2017). Therefore, Apple’s success story is reflected in its background and history, where it began as a small initiative of two young individuals whose proactive developments led to what it is today.

Industry

It is important to point out that Apple Inc. operates in the consumer electronics industry, including computer hardware and computer software. These examples include smartphones, personal computers or PCs, electronic watches, TVs, and other accessories. In the case of software, there are music platforms, mobile and computer application platforms, and inherent device software, such as IOS. The industry can be categorized as highly competitive with a high bar for entry since the raw materials, technical skills, and labor needed to manufacture a smartphone or another form of computer is costly. Therefore, the industry is mainly dominated by a number of giant enterprises, such as Samsung, Huawei, Xiaomi, LG, and others. One can see that Apple Inc.’s competition is primarily international. In regards to the software market, Apple also directly competes with Microsoft, Google, Amazon, and other platforms due to their overlapping services.

Rationale

The main reason for selecting Apple Inc. for the given assessment is due to my personal interest and curiosity since I regularly use the company’s products and services. In addition, it is among the well-recognized corporate entities in the world, and its history and brand are well-known. Therefore, I was highly interested in analyzing the financial metrics of the company in order to expand my knowledge and apply my learned skills of financial assessment to the company of my interest. The source of this success is seen in the fact that Apple’s iPhone has the highest consumer satisfaction ratings in history (Rawlinson, 2017). Apple’s profit exceeds IBM’s, and it is considered one of the most innovative and valuable companies in the world. Such overwhelming success always raises questions about its origin. In a short time, Apple has done a great job of marketing its products (Rawlinson, 2017). In addition, Apple stores are the most productive in retail history. Due to a wide range of products, constant innovative development, the creation of new designs, and methods of product promotion, the company creates an image of uniqueness and status for your products. Accordingly, when introducing unique products to the market, the company can successfully use the strategy of high prices, and with their further sale, the strategy of price anchor, which is analyzing its key financial metrics, is interesting and engaging.

Calculations

The key financial metrics of Apple Inc. for the past five years are shown in Table 1 below. The mean, range, and standard deviation or SD values for the company’s revenues, net income, and total assets are shown in Table 2.

Table 1. Financial Metrics

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Apple Financial Statements 2016-2020
2016 2017 2018 2019 2020
Sales $215 639,00 $229 234,00 $265 595,00 $260 174,00 $274 515,00
2016 2017 2018 2019 2020
Total Expenses $155 615,00 $167 890,00 $194 697,00 $196 244,00 $208 227,00
2016 2017 2018 2019 2020
Net Income $45 687,00 $48 351,00 $59 531,00 $55 226,00 $57 411,00
2016 2017 2018 2019 2020
Total Assets $321,686 $375,319 $365,725 $338,516 $323,888
2016 2017 2018 2019 2020
Total Liabilities $193,437 $241,272 $258,578 $248,028 $258,549
2016 2017 2018 2019 2020
Shareholders’ Equity $ 128,29 $ 134,05 $ 107,15 $ 90,49 $ 65,34
2016 2017 2018 2019 2020
Stock Price (12/31) $ 27,29 $ 40,52 $ 38,34 $ 72,44 $ 132,07

Table 2. Mean, Range, and Standard Deviation

Mean Range SD
Sales $249 031,40 58 876,00 25273,07695
Net Income $53 241,20 13 844,00 5955,422756
Total Assets $350,312 53,633 24,64077995

Challenge

As exemplified in Table 1, it is certain that Apple is still evolving and developing in terms of income and stock price. While the evidence illustrates a highly favorable environment, it can be challenging to maintain the same exemplary rates and facilitate even more beneficial organizational outcomes. Apple is a corporation with excellent financial potential that has exponentially grown due to the company’s innovations, customer focus, and branding. However, since the organization has developed at such a high level, it is hard to predict the next steps towards meeting consumer demand, being competitive on the market, and further implementing positive strategies that can improve organizational results in the future.

While the current outcomes are mainly positive and illustrate a gradual organizational growth, maintaining the title of one of the most productive companies in the world may be a challenging task that requires significant effort. Moreover, the technological industry keeps advancing and developing, which allows rivals to have access to the same tools and effectiveness when it comes to releasing products that customers may favor. Hence, Apple has to focus on keeping standards high, mitigating competitiveness on the market, and maintaining similar high measurements when it comes to innovative devices and products that users are not able to buy from other manufacturers. The major challenge is prolonging the maturity stage for as long as possible since this period of the lifecycle correlates with the best performance and financial results in the life of a company.

Industrial Problem

Such issues are common within organizations that go through a particular period which correlates with challenges such as moving forward, integrating innovations, and maintaining high positions on the market. Since Apple is a highly successful corporation, it may be related to the organizational lifecycle that determines how it operates and what the possible future implications are going to illustrate. Organizational lifecycles are stages in which different companies contrast in terms of effectiveness, proficiency, competitiveness, and customer demands. Researchers refer to these steps as formation, establishment, maturity, and a subsequent decline (Markard, 2020). Based on such assessments, companies operate differently based on the level of development they have reached.

Apple is an excellent example of a company that has reached maturity due to its impressive income and worldwide popularity. It is safe to say that Apple is the most recognizable brand in the world, which is evidence for the maturity stage. It is hard to maintain such high rates of efficiency for a prolonged period of time. Consumers tend to change their preferences, new entrants may have better solutions, and the overall innovation mark may increase due to the high market competitiveness. However, analyzing existing statistical data is an efficient way to examine when the corporation had the best results, how such outcomes were achieved, and what needs to be implemented to repeat or even improve similar implications. Such an examination of quantitative data facilitates a transparent overview of the corporate impacts and the actions or policies which contributed to the results.

Statistical Methods

Both qualitative and quantitative data analysis is practical when it comes to analyzing organizational results, direct measurements of productivity, and an increase or decrease in income. Table 1 exemplifies the results observed between 2016 and 2020. Researchers refer to statistical methods as ways to examine data with the purpose of reaching organizational objectives and increasing profit (Goyal, Jirkuntwar, Hasani, & Burla, 2021). Apple can use the same approach to examine the most effective implementations based on the organizational results. First and foremost, there is a need for an assessment of the years which appeared to be most financially profitable. Moreover, the highest income has to be linked to specific organizational strategies, releases, or leadership changes within the company. Based on Table 1, the most significant sales, net income, and assets rates were experienced in 2018. The next step is linking this information with direct actions implemented in 2018. Such positive outcomes may have been the result of releasing a product that consumers preferred, implementing specific managerial decisions that positively impacted employee engagement, and an overall positive external environment exemplified through low competition.

Furthermore, a year that was not particularly efficient in comparison to prior and future outcomes can be examined with the purpose of finding what caused lower rates of sales and income. The negative implications can also be linked to high competition, a release of a mediocre product, or global economic challenges. This is a statistical approach that facilitates a highlighted cause and effect correlation. The findings may give Apple representatives an overview of what needs to be improved and how the company has to move forward to maintain the maturity stage for a more extended time period. Moreover, the statistical methods mentioned previously can minimize the risks of operating under strategies that did not necessarily benefit the organization in the past. Since the aim is to maintain a high position and mitigate competition with strong rivals who have similar objectives and products, each negative impact has to be predicted and avoided during decision-making processes.

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Conclusion

In conclusion, Apple Inc. is an outstanding example of a highly successful enterprise, which started out as a small garage business by two young individuals. The company specializes in consumer electronics, which includes both computer software and hardware. The range of competitors is expansive, such as Samsung, Microsoft, Xiaomi, and other large international corporations. Apple’s brand and quality of products are among the highest in terms of customer satisfaction, which due to the company management and operational excellence.

References

Goyal, A., Jirkuntwar, V., Hasani, V., & Burla, T. (2021). BUSINESS ANALYTICS, BACKBONE OF ORGANIZATIONS – A LITERATURE REVIEW. PalArch’s Journal of Archaeology of Egypt / Egyptology, 18(10), 793-802.

Markard, J. (2020). The life cycle of Technological Innovation Systems. Technological Forecasting and Social Change, 153, 119407.

Rawlinson, N. (2017). History of Apple: The story of Steve Jobs and the company he founded. MacWorld. Web.

Reuters. (2021). Apple Inc. Web.

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BusinessEssay. (2022, September 13). Apple Company's Key Financial Metrics Evaluation. Retrieved from https://business-essay.com/apple-companys-key-financial-metrics-evaluation/

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BusinessEssay. (2022) 'Apple Company's Key Financial Metrics Evaluation'. 13 September.

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BusinessEssay. 2022. "Apple Company's Key Financial Metrics Evaluation." September 13, 2022. https://business-essay.com/apple-companys-key-financial-metrics-evaluation/.

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