The Financial Statement of Apple Inc

📄 Words:	2320
📝 Subject:	Financial Management
📑 Pages:	5
💼 Companies:	Apple

Introduction: An overview of Apple Inc

Apple Inc is a multinational company that is based in the United States of America and has operations in different parts of the world. The company has its headquarter situated in California in a place called Cupertino. It was founded by Steve Jobs and two other colleagues in 1976 and has grown into a multinational company over the 36 years that it has been in operation. The company designs develop and sell products such as computer software, electronics and computers among others. Its product line has extended over the years to incorporate products such as iPod, iPhone, iPad among other hardware products.

The current company CEO is Tim Cook who took over from Steve Jobs on August 24, 2011, when he resigned and became the Chairman. The company has created many jobs in all the countries where it operates (White, 2010). It had 72800 full-time employees by September 2012 who are on a permanent basis, and about 3300 that are on a temporary basis but full-time. According to Reuters (2012), “The Company operates in five segments including America, Europe, Japan, Asia-Pacific, and retail.” (p. 1). The company distributes its products throughout the world using its retail shops, online stores, and direct sales force among other means.

The latest financial statements

The most recent financial statements of the company were prepared in 2012. Since we are analyzing the financial statements of the company for the past 5 years, we present the financial statement for the years 2008 to 2012.

Income statement: obtained from Market Watch (2012). Web.

Fiscal year is October-September. All values USD millions.	2008	2009	2010	2011	2012
Sales/Revenue	32.48B	42.6B	65.07B	108.6B	155.97B
Cost of Goods Sold (COGS) incl. D&A	21.33B	25.75B	39.5B	64.08B	87.78B
COGS excluding D&A	20.86B	25.02B	38.47B	62.26B	84.5B
Depreciation & Amortization Expense	473M	734M	1.03B	1.81B	3.28B
Depreciation	363M	606M	815M	1.6B	2.6B
Amortization of Intangibles	110M	128M	212M	214M	677M
Gross Income	11.15B	16.85B	25.57B	44.52B	68.2B
SG&A Expense	4.87B	5.48B	7.3B	10.03B	13.42B
Research & Development	1.11B	1.33B	1.78B	2.43B	3.38B
Other SG&A	3.76B	4.15B	5.52B	7.6B	10.04B
Other Operating Expense	0	0	0	0	0
Unusual Expense	0	(333M)	(295M)	1.57B	(467M)
EBIT after Unusual Expense	0	333M	295M	(1.57B)	467M
Non Operating Income/Expense	(33M)	(44M)	(336M)	758M	(566M)
Non-Operating Interest Income	653M	407M	311M	519M	1.09B
Equity in Affiliates (Pretax)	0	0	0	0	0
Interest Expense	0	0	0	0	0
Gross Interest Expense	0	0	0	0	0
Interest Capitalized	0	0	0	0	0
Pretax Income	6.9B	12.07B	18.54B	34.21B	55.76B
Income Tax	2.06B	3.83B	4.53B	8.28B	14.03B
Income Tax – Current Domestic	2.15B	2.45B	2.81B	4.65B	8.42B
Income Tax – Current Foreign	277M	345M	282M	769M	1.2B
Income Tax – Deferred Domestic	(237M)	1.08B	1.56B	3.04B	4.9B
Income Tax – Deferred Foreign	(131M)	(35M)	(121M)	(167M)	(490M)
Income Tax Credits	0	0	0	0	0
Equity in Affiliates	0	0	0	0	0
Other After Tax Income (Expense)	0	0	0	0	0
Consolidated Net Income	4.83B	8.24B	14.01B	25.92B	41.73B
Minority Interest Expense	0	0	0	0	0
Net Income	4.83B	8.24B	14.01B	25.92B	41.73B
Extraordinaries & Discontinued Operations	0	0	0	0	0
	0	0	0	0	0
Extra Items & Gain/Loss Sale Of Assets	0	0	0	0	0
Cumulative Effect – Accounting Chg	0	0	0	0	0
Discontinued Operations	4.83B	8.24B	14.01B	25.92B	41.73B
Net Income After Extraordinaries	0	0	0	0	0
Preferred Dividends	4.83B	8.24B	14.01B	25.92B	41.73B
Net Income Available to Common	5.48	9.22	15.41	28.05	44.64
EPS (Basic)	881.59M	893.02M	909.46M	924.26M	934.82M
Basic Shares Outstanding	5.36	9.08	15.15	27.68	44.15
EPS (Diluted)	902.14M	907.01M	924.71M	936.65M	945.36M
Diluted Shares Outstanding	6.75B	12.1B	19.3B	36.31B	58.05B
EBITDA	6.75B	12.1B	19.3B	36.31B	58.05B

Balance Sheet: obtained from Market Watch (2012). Web.

Assets
Fiscal year is October-September. All values USD millions.	2008	2009	2010	2011	2012
Cash & Short Term Investments	24.49B	23.46B	25.62B	25.95B	29.13B
Cash Only	368M	1.14B	1.69B	2.9B	3.11B
Short-Term Investments	24.12B	22.33B	23.93B	23.05B	26.02B
Total Accounts Receivable	4.7B	5.06B	9.92B	11.72B	18.69B
Accounts Receivables, Net	2.42B	3.36B	5.51B	5.37B	10.93B
Accounts Receivables, Gross	2.47B	3.41B	5.57B	5.42B	11.03B
Bad Debt/Doubtful Accounts	(47M)	(52M)	(55M)	(53M)	(98M)
Other Receivables	2.28B	1.7B	4.41B	6.35B	7.76B
Inventories	509M	455M	1.05B	776M	1.99B
Finished Goods	509M	455M	1.05B	776M	791M
Work in Progress	0	0	0	0	0
Raw Materials	0	0	0	0	0
Progress Payments & Other	0	0	0	0	1.2B
Other Current Assets	4.99B	2.58B	5.08B	6.54B	7.84B
Miscellaneous Current Assets	2.58B	2.27B	4.93B	5.82B	7.84B
Total Current Assets	34.69B	31.56B	41.68B	44.99B	57.65B

Net Property, Plant & Equipment	2.46B	2.95B	4.77B	7.78B	15.45B
Property, Plant & Equipment – Gross	3.75B	4.67B	7.23B	11.77B	21.89B
Buildings	810M	955M	1.47B	2.06B	2.44B
Land & Improvements	–	–	–	–	–
Computer Software and Equipment	–	–	–	–	15.74B
Other Property, Plant & Equipment	1.45B	1.78B	2.17B	2.78B	3.71B
Accumulated Depreciation	1.29B	1.71B	2.47B	3.99B	6.44B
Total Investments and Advances	0	10.53B	25.39B	55.62B	92.12B
Other Long-Term Investments	0	0	25.39B	55.62B	92.12B
Long-Term Note Receivable	0	0	0	0	0
Intangible Assets	559M	559M	1.08B	4.43B	5.36B
Net Goodwill	207M	206M	741M	896M	1.14B
Net Other Intangibles	352M	353M	342M	3.54B	4.22B
Other Assets	1.73B	1.74B	2.26B	3.56B	5.48B
Tangible Other Assets	433M	898M	1.46B	1.96B	2.48B
Total Assets	39.57B	47.5B	75.18B	116.37B	176.06B
Liabilities & Shareholders’ Equity
	2008	2009	2010	2011	2012
ST Debt & Current Portion LT Debt	0	0	0	0	0
Short Term Debt	0	0	0	0	0
Current Portion of Long Term Debt	0	0	0	0	0
Accounts Payable	5.52B	5.6B	12.02B	14.63B	21.18B
Income Tax Payable	100M	430M	210M	1.14B	1.54B
Other Current Liabilities	8.47B	5.48B	8.5B	12.2B	15.83B
Dividends Payable	0	0	0	0	–
Accrued Payroll	320M	357M	436M	590M	735M
Miscellaneous Current Liabilities	8.15B	5.12B	8.06B	11.61B	15.1B
Total Current Liabilities	14.09B	11.51B	20.72B	27.97B	38.54B
Long-Term Debt	0	0	0	0	0
Long-Term Debt excl. Capitalized Leases	0	0	0	0	0
Non-Convertible Debt	0	0	0	0	0
Convertible Debt	0	0	0	0	0
Capitalized Lease Obligations	0	–	0	0	0
Provision for Risks & Charges	–	0	–	0	0
Deferred Taxes	537M	2.05B	4.3B	8.16B	13.85B
Deferred Taxes – Credit	675M	2.22B	4.3B	8.16B	13.85B
Deferred Taxes – Debit	138M	163M	–	0	0
Other Liabilities	3.78B	2.14B	2.37B	3.63B	5.47B
Other Liabilities (excl. Deferred Income)	746M	1.29B	1.23B	1.94B	2.82B
Deferred Income	3.03B	853M	1.14B	1.69B	2.65B
Total Liabilities	18.54B	15.86B	27.39B	39.76B	57.85B
Non-Equity Reserves	0	0	0	0	0
Preferred Stock (Carrying Value)	0	0	0	0	0
Redeemable Preferred Stock	0	0	0	0	0
Non-Redeemable Preferred Stock	0	0	0	0	0
Common Equity (Total)	21.03B	31.64B	47.79B	76.62B	118.21B
Common Stock Par/Carry Value	7.18B	8.21B	10.67B	13.33B	16.42B
Retained Earnings	13.85B	23.35B	37.17B	62.84B	101.29B
ESOP Debt Guarantee	0	0	0	0	0
Cumulative Translation Adjustment/Unrealized For. Exch. Gain	59M	28M	(217M)	313M	(232M)
Unrealized Gain/Loss Marketable Securities	(51M)	49M	171M	130M	731M
Revaluation Reserves	0	0	0	0	0
Treasury Stock	0	0	0	0	0
Total Shareholders’ Equity	21.03B	31.64B	47.79B	76.62B	118.21B
Accumulated Minority Interest	0	0	0	0	0
Total Equity	21.03B	31.64B	47.79B	76.62B	118.21B
Liabilities & Shareholders’ Equity	39.57B	47.5B	75.18B	116.37B	176.06B

Cash flow statements. Obtained from Market Watch (2012). Web.

Operating Activities
Fiscal year is October-September. All values USD millions.	2008	2009	2010	2011	2012	5-year trend
Net Income before Extraordinaries	4.83B	8.24B	14.01B	25.92B	41.73B
Depreciation, Depletion & Amortization	473M	734M	1.03B	1.81B	3.28B
Depreciation and Depletion	363M	606M	815M	1.6B	2.6B
Amortization of Intangible Assets	110M	128M	212M	214M	677M
Deferred Taxes & Investment Tax Credit	(368M)	1.04B	1.44B	2.87B	4.41B
Deferred Taxes	(368M)	1.04B	1.44B	2.87B	4.41B
Investment Tax Credit	0	0	0	0	–
Other Funds	538M	736M	903M	1.17B	1.74B
Funds from Operations	5.48B	10.75B	17.38B	31.77B	51.16B
Extraordinaries	0	0	0	0	0
Changes in Working Capital	4.12B	(586M)	1.21B	5.76B	(299M)
Receivables	(785M)	(939M)	(4.86B)	(1.79B)	(6.97B)
Accounts Payable	596M	92M	6.31B	2.52B	4.47B
Other Assets/Liabilities	4.47B	207M	361M	4.76B	2.21B
Net Operating Cash Flow	9.6B	10.16B	18.6B	37.53B	50.86B
Investing Activities
	2008	2009	2010	2011	2012	5-year trend
Capital Expenditures	(1.2B)	(1.21B)	(2.12B)	(7.45B)	(9.4B)
Capital Expenditures (Fixed Assets)	(1.09B)	(1.14B)	(2.01B)	(4.26B)	(8.3B)
Capital Expenditures (Other Assets)	(108M)	(69M)	(116M)	(3.19B)	(1.11B)
Net Assets from Acquisitions	(220M)	0	(638M)	(244M)	(350M)
Sale of Fixed Assets & Businesses	0	0	0	0	–
Purchase/Sale of Investments	(6.76B)	(16.15B)	(11.09B)	(32.46B)	(38.43B)
Purchase of Investments	(23B)	(46.83B)	(57.81B)	(102.32B)	(151.23B)
Sale/Maturity of Investments	16.24B	30.68B	46.72B	69.85B	112.81B
Other Uses	(10M)	(74M)	(2M)	(259M)	(48M)
Other Sources	0	0	0	0	–
Net Investing Cash Flow	(8.19B)	(17.43B)	(13.85B)	(40.42B)	(48.23B)
Financing Activities
	2008	2009	2010	2011	2012	5-year trend
Cash Dividends Paid – Total	0	0	0	0	(2.49B)
Common Dividends	0	0	0	0	(2.49B)
Preferred Dividends	0	0	0	0	0
Change in Capital Stock	359M	393M	912M	831M	665M
Repurchase of Common & Preferred Stk.	(124M)	(82M)	0	0	0
Sale of Common & Preferred Stock	483M	475M	912M	831M	665M
Proceeds from Stock Options	0	0	0	831M	665M
Other Proceeds from Sale of Stock	483M	475M	912M	0	0
Issuance/Reduction of Debt, Net	0	0	0	0	0
Change in Current Debt	0	0	0	0	0
Change in Long-Term Debt	0	0	0	0	0
Issuance of Long-Term Debt	0	0	0	0	0
Reduction in Long-Term Debt	0	0	0	0	0
Other Funds	757M	270M	345M	613M	125M
Other Uses	0	0	(406M)	(520M)	(1.23B)
Other Sources	757M	270M	751M	1.13B	1.35B
Net Financing Cash Flow	1.12B	663M	1.26B	1.44B	(1.7B)
Exchange Rate Effect	–	–	–	–	0
Miscellaneous Funds	0	0	0	0	0
Net Change in Cash	2.52B	(6.61B)	6B	(1.45B)	931M
Free Cash Flow	8.51B	9.02B	16.59B	33.27B	40.07B

Description of the financial statements

Income statement

The company’s revenue from sales for 2012 was 155.97B. The cost of goods sold was 87.78B. The gross income, therefore, was 68.2B. The pretax income was 55.76B. The income tax amounted to 14.03B. This led to a consolidated net income of 41.73B and because there was no Minority Interest Expense, the net income was represented by the same figure.

Balance Sheet

The company’s total assets for the year 2012 amounted to 176.06B. 5.36B of this figure represented the total amount of intangible assets, 57.65B represented total current assets and the rest were the non-current assets. The value for the total liabilities of 57.85B included 38.54B of current liabilities, 13.85B deferred taxes, and 5.47B were other liabilities.

Cash Flow Statements

The cash flow included cash flow from Operating Activities, investing and financing activities (Faas, 2011). In 2012, the net cash flow from operating activities amounted to 50.86B. The investing and financing activities had negative cash flows of (48.23B) and (1.7B) respectively. The net change in cash that remained was 931M.

Ratio Analysis

The Ratios for APPLE and Google Are Represented In the Tables Below

Apple Ratios

The Ratios for APPLE and Google

The liquidity ratios show that Google has strong liquidity than Apple. For instance, Google has a current ratio of 8.27 while that of Apple is 2.462 in 2008 and 1.5 in 2012. Other liquid ratios like quick ratio and cash ratio have the same information the two companies. Return on equity for Google is 15% while that of Apple is 22.97 in 2008. It increased between 2008 and 2012. This means that Apple is better to invest in than Google because it has a higher return on equity (Fox News, 2012). The Debt ratio of the company also reveals the amounts of assets that are financed by borrowed funds are at a reasonable level (Gallagher, 2007).

The Debt Equity ratio is below 50 % which is healthy for a company. The time interest ratio was not computed because there was no interest expense for Apple. According to Gibson (2012), the ratio is supposed to indicate the number of times a company can pay interest from its earnings before paying taxes. The company’s net profit margin for the period from 2008 to 2010 was less than that of its competitors. A company with high profitability ratios will be worthy to invest in because it will have a higher return on equity (Morrell, 2007). The dividend payout ratio for Apple increased slightly between 2008 and 2012. This means that more profits were paid out as dividends (Megginson, W. L and Smart, 2008).

Key Statistics

There are other statistics for the companies that can help an investor determine the best company to invest in. for instance, the current market value for APLE is 475 billion according to Forbes.com (2012). The company has a beta of 0.93. According to Forbes.com (2012), the company has a market value of 186 billion and a beta of 1.23.

Recommendations

Firstly, based on key statistics, Apple is found to be better than Google invest. The beta for Apple is less than that of Google, meaning that Apple is less risky to invest in compared to Google (Taylor, 2010). According to Gustin (2012), a higher beta means a higher risk. Apple also has a higher market value than Google. A rational investor will consider investing in Apple instead of Google because he will be faced with minimal risks (Burrows, 2010).

References

Burrows, P. (2010). Apple vs. Google. Web.

Faas, R. (2011). How the Apple iCloud compares to Google’s cloud. Web.

Forbes. (2012). Apple Inc (NASDAQ: AAPL). Web.

Fox News. (2012). Apple vs. Google: Who Will Own the Tech World? Web.

Gallagher, A. (2007). Financial Management; Principles and Practice. Uk: Freeload Press, Inc.

Gibson, C. (2012). Financial Reporting & Analysis: Using Financial Accounting Information. London: Cengage Learning.

Gustin, S. (2012). Apple vs. Google Is the Most Important Battle in Tech. US: Time Inc.

Market Watch. (2012). Annual Financials for Apple Inc.: Balance Sheet. Web.

Market Watch. (2012). Annual Financials for Apple Inc.: Cash flow Statement. Web.

Market Watch. (2012). Annual Financials for Apple Inc.: Income Statement. Web.

Megginson, W. L and Smart, S. B. (2008). Introduction to Corporate Finance. Cambridge: Cengage Learning.

Morrell, P. S. (2007). Airline Finance. US: Ashgate Publishing, Ltd.

Reuters. (2012). Profile: Apple Inc (AAPL.O). Web.

Taylor, D. (2010) The Ask Dave Taylor Apple iPad Answer Guide. London: BookBrewer.

White, M. (2010). Apple, Google, Microsoft Intranet Focus Ltd Winners and losers. London: Intranet Focus Ltd.

Appendix: Google Ratios

	2008	2009	2010	2011
current ratio	20178.2/2,302.1=8.76	29167/2,747.0= 10.617	41562/9,996=4.157	52758/8,913=5.92
quick ratio	20178-()/2302=	29167-()/2747	41562-()/9996=	52758-()/8913=
Cash ratio	8656.7/2302.1=3.76	10198/2747=3.71	12019/9996=1.20	8683/8913=0.97
return on equity	4,227/28238.9= 0.15	6,520/36004=0.18	8,505/46241=0.183	9,737/58145=0.167
Gross profit margin	13174/21,796=0.604	14807/23,651=0.626	18904/29,321=0.645	24717/37,905=0.652
return on shareholders	4227/28238.9=0.513	6520/36004=0.181	8505/46421=0.183	9737/58145=0.167
gross profit percentage	13174*100/21796=60.4%	*14807100/23,651=62.2%**	*18,904100/29,321=64.47%**	*24717100/37,905=65.20%**
operating cost percentage	*6,542100/21796=30.01%**	*6495100/2365127.46%**	*8523100/29321=29.06%**	*12475100/37905=32.92%**
effective tax rate	1626/5,853=0.277	1,861.0/8381=0.222	2291/10,796=0.212	2589/12,326=0.210
net profit margin	4227*100/21,796=19.39%	6520*100/23,651=27.56%	8505*100/29,321=29%	9737*100/37,905=25.68%
return on investment	4227/	6,520.00	8,505.00	9,737.00
return on capital employed
return on equity	4227/28238.9=0.149	6520/36004=0.181	8505/46241=0.184	9737/58145=0.167
stockholding period	365*
fixed assets turnover	21796/11588.8=1.88	23651/11330=2.07	29321/16289=1.37	37905/19816=1.91
Total asset turn over	21796/31,767.6=0.068	23651/40,497=0.584	29321/57,851=0.506	37905/72,574=0.522
Dividend payout
return on shareholders fund	4227/28238.9=0.149	6520/36004=0.181	8505/46241=0.184	9737/58145=0.167
earning per share