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Apple Market Position Analysis

📄 Words: 2455
📝 Subject: Company Analysis
📑 Pages: 5
💼 Companies: Apple

Background information

Steve Jobs and Steve Wozniak established Apple Inc. in 1997. It was formerly known as Apple Computer, Inc., before diversifying its operations and adopting the name Apple Inc. The company was later incorporated in California on January 3, 1977. The few years that followed saw a slow growth and marginal profits for the company. This continued until Steve Jobs came back to the company as CEO after several years of running his own business, NeXT. As the company’s CEO, Steve Jobs revolutionized Apple Inc. to be the multinational company we know today. Currently, Apple’s dominance in the technology industry cannot be rivaled (Morales & Kacher).

Apple specializes in the designs, manufacturing, and marketing of mobile communication and media devices as well as portable digital music players. In addition, it sells a variety of related software such as operating system software (iOS), peripherals, network solutions, and third-party digital content and application. Some of its popular products include the iPhone, Mac (portables and desktop), iPod, Apple TV, and a variety of accessory services. The company’s client base is broad and ranges from household consumers, small and midsized businesses, educational institutions, and enterprises to governments. The company has strived to remain relevant, therefore, commanding a sizeable market share since its inception. This has been achieved through thorough research and development of market trends and technological advancements, the production of quality products, and aggressive advertisements. Since its inception, the company has set foot in almost all the continents, including America, Europe, Asia Pacific, and even Africa.

It is prudent to acknowledge that Apple exists in an intensely competitive industry. The company continues to face aggressive competitors in all its spheres of business operations. Notable competitors include Google Inc., Hewlett-Packard Company, and Research In Motion Limited (Yahoo Finance). The technology market is characterized by frequent product innovation, and technological advancements (Holt 29). Apple Inc. has made tremendous strides to level these challenges. However, its continued market dominance relies on its ability to develop and offer new innovative products and services.

The technology industry is rapidly growing. More and more people continue to accept the importance of technology in improving the quality of life and making work easier. This has ensured significant market growth. As a result, strategically placed and innovation-oriented companies in the industry are a going concern. Apple is one of such companies with the high possibility of future growth. Despite having several revolutionary products, the company has continued to finance several research projects aimed at inventing other new products. In Mach 2012, for instance, the company launched an LTE-enabled iPad tablet.

The Company’s financing

The main source of financing for Apple Inc. is sales. In 2011, the company’s sales hit $27 billion (Goldman). The company also gets money from trading in shares. Apple’s shares have been doing well in the securities exchange market. Share income is the investor’s funds, which are paid back through dividends.

Company Ratio analysis

Apple, Inc. (AAPL) Annual Balance Sheet

Period Ending FY2010 FY2009 FY2008 FY2007 FY2006
Assets
Cash and Short Term Investments 25.73 B 23.46 B 22.23 B 15.39 B 10.11 B
Net Receivables 9.92 B 5.06 B 4.70 B 4.03 B 2.84 B
Total Inventories 1.05 B 455.00 M 509.00 M 346.00 M 270.00 M
Progress Payments & Others 0.00 0.00 0.00 0.00 0.00
Prepaid Expenses 157.00 M 309.00 M 475.00 M 417.00 M 208.00 M
Other Current Assets 4.82 B 8.09 B 2.09 B 1.78 B 1.08 B
Current Assets Total 41.68 B 31.56 B 30.01 B 21.96 B 14.51 B
Long Term Receivables 0.00 0.00 0.00 0.00 0.00
Investment in Unconsolidated Subsidiaries 25.39 B 10.53 B 2.38 B 0.00 0.00
Other Investments 0.00 0.00 0.00 0.00 0.00
Property, Plant & Equipment Net 4.77 B 2.95 B 2.46 B 1.83 B 1.28 B
Property, Plant & Equipment Gross 7.23 B 4.67 B 3.75 B 2.84 B 2.08 B
Accumulated Depreciation 2.47 B 1.71 B 1.29 B 1.01 B 794.00 M
Other Assets 3.35 B 12.99 B 1.23 B 1.47 B 1.42 B
Deferred Charges 799.00 M 844.00 M 208.00 M 625.00 M 1.04 B
Tangible Other Assets 1.46 B 898.00 M 460.00 M 426.00 M 175.00 M
Intangible Other Assets 1.08 B 453.00 M 559.00 M 420.00 M 198.00 M
Total Assets 75.18 B 47.50 B 36.07 B 25.26 B 17.20 B
Liabilities
Short Term Debt & Current Portion of Long Term Debt 0.00 0.00 0.00 0.00 0.00
Accrued Payroll 436.00 M 357.00 M 320.00 M 254.00 M 221.00 M
Income Taxes Payable 210.00 M 430.00 M 506.00 M 488.00 M 388.00 M
Dividends Payable 0.00 0.00 0.00 0.00 0.00
Other Current Liabilities 8.06 B 5.12 B 5.02 B 3.59 B 2.47 B
Current Liabilities Total 20.72 B 11.51 B 11.36 B 9.30 B 6.47 B
Long Term Debt 0.00 0.00 0.00 0.00 0.00
Provision for Risks & Charges 0.00 0.00 0.00 0.00 0.00
Deferred Taxes 4.30 B 0.00 895.00 M 531.00 M 381.00 M
Deferred Income 1.14 B 853.00 M 768.00 M 830.00 M 355.00 M
Deferred Tax Liability in Untaxed Reserves — — — — —
Other Liabilities 1.23 B 4.36 B 746.00 M 67.00 M 14.00 M
Total Liabilities 27.39 B 15.86 B 13.77 B 10.73 B 7.22 B
Shareholders’ Equity
Non-Equity Reserves 0.00 0.00 0.00 0.00 0.00
Minority Interest 0.00 0.00 0.00 0.00 0.00
Preferred Stock 0.00 0.00 0.00 0.00 0.00
Common Equity 47.79 B 31.64 B 22.30 B 14.53 B 9.98 B
Common Stock 10.67 B 8.21 B 7.18 B 5.37 B 4.36 B
Capital Surplus — — — — —
Revaluation Reserves 0.00 0.00 0.00 0.00 0.00
Other Appropriated Reserves -61.00 M -93.00 M -62.00 M — —
Unappropriated (Free) Reserves 0.00 0.00 — — —
Retained Earnings 37.17 B 23.35 B 15.13 B 9.10 B 5.61 B
Equity in Untaxed Reserves — — — — —
ESOP Guarantees 0.00 0.00 0.00 0.00 0.00
Unrealized Foreign Exchange Gain (Loss) 35.00 M 28.00 M 61.00 M 70.00 M 19.00 M
Unrealized Gain (Loss) on Marketable Securities -81.00 M 49.00 M -70.00 M -7.00 M 3.00 M
Treasury Stock 0.00 0.00 0.00 0.00 0.00
Total Liabilities & Shareholders’ Equity 75.18 B 47.50 B 36.07 B 25.26 B 17.20 B
Common Shares Outstanding 915.97 M 899.81 M 888.33 M 872.33 M 855.26 M

Apple, Inc. Annual Income Statement

Period Ending FY2010 FY2009 FY2008 FY2007 FY2006
Net Sales/Revenues 65.07 B 42.90 B 37.49 B 24.01 B 19.32 B
Cost of Goods Sold (Excluding Depreciation) 38.47 B 24.95 B 23.80 B 15.54 B 13.49 B
Depreciation, Depletion and Amortization 1.03 B 734.00 M 496.00 M 317.00 M 225.00 M
Gross Income 25.57 B 17.22 B 13.20 B 8.15 B 5.60 B
Selling, General & Admin Expenses 7.30 B 5.48 B 4.87 B 3.74 B 3.14 B
Other Operating Expense 0.00 0.00 0.00 0.00 0.00
Operating Expenses – Total 551.00 M 911.00 M 930.00 M 1.63 B 1.40 B
Operating Income 18.27 B 11.74 B 8.33 B 4.41 B 2.45 B
Extraordinary Credit – Pretax 1.00 M 3.00 M 0.00 0.00 0.00
Extraordinary Charge – Pretax 175.00 M 97.00 M 0.00 0.00 0.00
Non-operating Interest Income 311.00 M 407.00 M 653.00 M 647.00 M 394.00 M
Reserves Inc (Dec) 0.00 0.00 0.00 0.00 0.00
Pretax Equity in Earnings 0.00 0.00 0.00 0.00 0.00
Other Income/Expenses – Net 133.00 M 326.00 M -33.00 M -48.00 M -29.00 M
Earnings Before Interest & Taxes (EBIT) 18.54 B 12.07 B 6.90 B 5.01 B 2.82 B
Interest Expenses On Debt 0.00 0.00 0.00 0.00 0.00
Interest Capitalized 0.00 0.00 0.00 0.00 0.00
Pretax Income 18.54 B 12.07 B 8.95 B 5.01 B 2.82 B
Income Taxes 4.53 B 3.83 B 2.83 B 1.51 B 829.00 M
Current Domestic Income Tax 2.80 B 2.45 B 2.16 B 1.33 B 675.00 M
Current Foreign Income Tax 282.00 M 345.00 M 275.00 M 103.00 M 101.00 M
Deferred Domestic Income Tax 1.56 B 1.08 B 473.00 M 94.00 M 70.00 M
Deferred Foreign Income Tax -121.00 M -35.00 M -75.00 M -16.00 M -17.00 M
Income Tax Credits — — — — —
Minority Interest 0.00 0.00 0.00 0.00 0.00
Equity in Earnings 0.00 0.00 0.00 0.00 0.00
After Tax Income Expense 0.00 0.00 0.00 0.00 0.00
Discontinued Operations 0.00 0.00 0.00 0.00 0.00
Net Income Before Extra Items/Preferred Div 14.01 B 8.24 B 6.12 B 3.50 B 1.99 B
Extra Items & Gain (Loss) Sale of Assets 0.00 0.00 0.00 0.00 0.00
Net Income Before Preferred Dividends 14.01 B 8.24 B 6.12 B 3.50 B 1.99 B
Preferred Dividend Requirements 0.00 0.00 0.00 0.00 0.00
Net Income Available to Common 14.01 B 8.24 B 6.12 B 3.50 B 1.99 B

Liquidity Ratios

Working Capital                  = Current Assets – Current Liabilities

                                                  = 416800000-207200000

                                                  = 209600000

Current Ratio                         = Current Assets

Current Liabilities

= 41.68

20.72

=2.012

Profitability Ratios

Net Profit Margin (Return on Sales)                  = Net Income

Net Sales

= 14.01×100

65.07

= 21.5%

Return on Assets                                                      = Net Income

(Beginning + Ending Total Assets) / 2

= 14.01×100

37.59

= 37.27%

Operating Income Margin                                     = Operating Income

Net Sales

= 18.27

65.07

= 0.2808

Return on Investment                                              = Net Income

Long-term Liabilities + Equity

                                                                                       = 14.01

                                                                                       6.67+47.79

                                                                                       = 14.01×100

                                                                                       54.46

                                                                                      = 25.73%

Return on Equity                                                      = Net Income

Equity

= 14.01×100

47.79

= 29.32%

Gross Profit Margin                                                  = Gross Profit

Net Sales

= 25.57×100

65.07

= 39.30%

Financial Leverage Ratio

Total Debts to Assets                                                   = Total Liabilities

Total Assets

                                                                                          = 27.39

75.18

= 0.3643

Capitalization Ratio                                                     = Long-Term Debt

Long-Term Debt + Owners’ Equity

                                                                                           = 0.00

                                                                                           6.67+47.79

                                                                                           = 0.0

Debt to Equity                                                                = Total Debt

Total Equity

= 27.39

                                                                                             47.79

                                                                                           = 0.5731

Long-term Debt to Net Working Capital                 = Long-term Debt

Current Assets – Current Liabilities

= 0.00

41.68 – 20.72

= 6.67

20.96

= 0.0

Efficiency Ratios

Cash Turnover                                                               = Net Sales

Cash

= 65.07

25.73

= 2.5290

Apple Inc. close competitors in the U.S

Hewlett-Packard Company

Balance sheet
Period Ending Oct 30, 2011 Oct 30, 2010 Oct 30, 2009
Assets
Current Assets
Cash And Cash Equivalents 8,043,000 10,929,000 13,279,000
Short Term Investments – – 55,000
Net Receivables 21,386,000 21,467,000 19,212,000
Inventory 7,490,000 6,466,000 6,128,000
Other Current Assets 14,102,000 15,322,000 13,865,000
Total Current Assets 51,021,000 54,184,000 52,539,000
Long Term Investments 10,755,000 12,225,000 11,289,000
Property Plant and Equipment 12,292,000 11,763,000 11,262,000
Goodwill 44,551,000 38,483,000 33,109,000
Intangible Assets 10,898,000 7,848,000 6,600,000
Accumulated Amortization – – –
Other Assets – – –
Deferred Long Term Asset Charges – – –
Total Assets 129,517,000 124,503,000 114,799,000
Liabilities
Current Liabilities
Accounts Payable 34,256,000 34,719,000 33,862,000
Short/Current Long Term Debt 8,083,000 7,046,000 1,850,000
Other Current Liabilities 8,103,000 7,638,000 7,291,000
Total Current Liabilities 50,442,000 49,403,000 43,003,000
Long Term Debt 22,551,000 15,258,000 13,980,000
Other Liabilities 17,520,000 19,061,000 17,052,000
Deferred Long Term Liability Charges – – –
Minority Interest 379,000 332,000 247,000
Negative Goodwill – – –
Total Liabilities 90,892,000 84,054,000 74,282,000
Stockholders’ Equity
Misc Stocks Options Warrants – – –
Redeemable Preferred Stock – – –
Preferred Stock – – –
Common Stock 20,000 22,000 24,000
Retained Earnings 35,266,000 32,695,000 29,936,000
Treasury Stock – – –
Capital Surplus 6,837,000 11,569,000 13,804,000
Other Stockholder Equity (3,498,000) (3,837,000) (3,247,000)
Total Stockholder Equity 38,625,000 40,449,000 40,517,000
Net Tangible Assets (16,824,000) (5,882,000) 808,000

Working Capital                                          = Current Assets – Current Liabilities

                                                                         = 51,021,000 –50,442,000

                                                                         = 579000

Current Ratio                                                = Current Assets

Current Liabilities

= 51021000

50442000

=1.011

Total Debts to Assets                                    = Total Liabilities

Total Assets

                                                                           = 51,021,000

50,442,000

= 1.0115

Capitalization Ratio                                     = Long-Term Debt

Long-Term Debt + Owners’ Equity

                                                                           = 22,551,000

                                                                           22,551,000+38,625,000

                                                                           = 22551000

                                                                             61176000

                                                                           =0.3686

Debt to Equity                                                = Total Debt

Total Equity

= 90,892,000

38,625,000

                                                                            = 2.3532

Long-term Debt to Net Working Capital = Long-term Debt

Current Assets – Current Liabilities

= 22,551,000

51,021,000 –50,442,000

= 22551000

                                                                               579000

= 38.9482

Google Inc. (GOOG) Company

Balance sheet

Period Ending Dec 30, 2011 Dec 30, 2010 Dec 30, 2009
Assets
Current Assets
Cash And Cash Equivalents 9,983,000 13,630,000 10,198,000
Short Term Investments 34,643,000 21,345,000 14,287,000
Net Receivables 6,387,000 5,261,000 3,845,000
Inventory – – –
Other Current Assets 1,745,000 1,326,000 837,000
Total Current Assets 52,758,000 41,562,000 29,167,000
Long Term Investments 790,000 523,000 129,000
Property Plant and Equipment 9,603,000 7,759,000 4,845,000
Goodwill 7,346,000 6,256,000 4,903,000
Intangible Assets 1,578,000 1,044,000 775,000
Accumulated Amortization – – –
Other Assets 499,000 442,000 415,000
Deferred Long Term Asset Charges – 265,000 263,000
Total Assets 72,574,000 57,851,000 40,497,000
Liabilities
Current Liabilities
Accounts Payable 7,148,000 6,137,000 2,462,000
Short/Current Long Term Debt 1,218,000 3,465,000 –
Other Current Liabilities 547,000 394,000 285,000
Total Current Liabilities 8,913,000 9,996,000 2,747,000
Long Term Debt 2,986,000 – –
Other Liabilities 2,199,000 1,579,000 1,704,000
Deferred Long Term Liability Charges 331,000 35,000 42,000
Minority Interest – – –
Negative Goodwill – – –
Total Liabilities 14,429,000 11,610,000 4,493,000
Stockholders’ Equity
Misc Stocks Options Warrants – – –
Redeemable Preferred Stock – – –
Preferred Stock – – –
Common Stock 20,264,000 18,235,000 15,817,000
Retained Earnings 37,605,000 27,868,000 20,082,000
Treasury Stock – – –
Capital Surplus – – –
Other Stockholder Equity 276,000 138,000 105,000
Total Stockholder Equity 58,145,000 46,241,000 36,004,000
Net Tangible Assets 49,221,000 38,941,000 30,326,000

Working Capital                                         = Current Assets – Current Liabilities

                                                                        = 52,758,000 – 8,913,000

                                                                        = 43845

Current Ratio = Current Assets

Current Liabilities

= 52,758,000

8,913,000

=5.92

Total Debts to Assets                                   = Total Liabilities

Total Assets

                                                                          = 14,429,000

72,574,000

= 0.1988

Capitalization Ratio                                     = Long-Term Debt

Long-Term Debt + Owners’ Equity

                                                                           = 2,986,000

2,986,000 +58,145,000

                                                                            = 2,986,000

                                                                               61131000

                                                                            = 0.0488

Debt to Equity                                                 = Total Debt

Total Equity

= 14,429,000

58,145,000

                                                                             = 0.248

Long-term Debt to Net Working Capital = Long-term Debt

Current Assets – Current Liabilities

= 2,986,000

52,758,000 – 8,913,000

= 2,986,000

                                                                              43845

= 68.10

APPLE GOOGLE HEWLETT-PACKARD COMPANY
Market Cap: 546.01B 196.76B 48.96B
Employees: 60,400 33,077 349,600
Qtrly Rev Growth 58.90% 24.10% -7.00%
Revenue 142.36B 39.98B 124.98B
Gross Margin 43.95% 64.88% 23.24%
EBITDA 53.27B 14.80B 15.54B
Operating Margin 35.69% 32.11% 8.41%
Net Income 38.62B 10.83B 5.94B
EPS 41.04 33.00 2.86
P/E 14.23 18.33 8.66
PEG (5 yr expected) 0.63 0.79 1.75
P/S 3.84 4.92 0.39

Apple Inc. is in the best financial institution. This is because the company pays back the highest amount to its shareholders. Its earnings per share are 41.04, Google’s 33, and Hewlett-Packard 2.86. Additionally, using PEG analysis still places the company in the best financial position. Lower PEG is an indication of high future growth and vice versa. Using this criterion, Hewlett-Packard is in the worst financial position.

Generally, P/E is the price shareholders are paid for each share held relative to the company’s net income. This is ratio is used for the evaluation of a company’s performance. Higher P/E is indicative of high costs of shares. It also shows the market demand for a company’s shares.

Works Cited

“Annual Balance Sheet | Apple Stock (AAPL).” Apple Stock (AAPL). Apple Stock, n.d. Web. 2012.

Goldman, David. “Apple sets new record with sales of $27 billion.” CNNMoney – Business, financial and personal finance news. N.p., 2011. Web.

Holt, Knut. Market oriented product innovation: a key to survival in the third millennium. Boston: Kluwer Academic Publishers, 2002. Print.

Morales, Gil, and Chris Kacher. “Has Apple become the market?.” MarketWatch – Stock Market Quotes, Business News, Financial News. The Wall Street Journal Digital Network, 2012. Web.

Yahoo Finance. “AAPL Competitors-Apple Inc. Stock.” Yahoo! Finance – Business Finance, Stock Market, Quotes, News. N.p., 2012. Web.

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