January 5, 2017

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APPLE

Dr. Rasha Al-Dayyat

Financial Statements Analysis Project

Done By:

Obaida Mubarak 20150010

Qais Alabsi 20150810

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Table of Content

1. Introduction …………………………………………………………………..

1.1. APPLE History………………………………………………….………… 3

1.2. Business Description………………………………………………....…… 3

1.3. APPLE`s Vision Statement……………………………………………….. 5

1.4. APPLE`s Mission Statement……………………………………………… 6

1.5. Exclusive Summary……………………………………………………….. 7

2. Financial Analysis……………………………………………………………..

2.1. Income Statement (Horizontal Analysis)…………………………………. 8

Interpretation…………………………………………………………... 8

2.2. Income Statement (Vertical Analysis)…………………………………..... 9

Interpretation……………………………………………………........... 9

2.3. Balance Sheet (Horizontal Analysis)……………………………………. 10

Interpretation…………………………………………………………. 11

2.4. Balance Sheet (Vertical Analysis)………………………………………. 12

Interpretation…………………………………………………………. 13

2.5. Financial Ratios………………………………………………………….. 14

3. SWOT…………………………………………………………………………

3.1. Strength………………………………………………………………….. 21

3.2. Weakness………………………………………………………………… 22

3.3. Opportunities…………………………………………………………….. 23

3.4. Threats…………………………………………………………………… 24

4. Market Share Price......................................................................................... 25

5. Conclusion and Recommendation………………………………………….. 26

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History

Apple Computers, Inc. was founded on April 1, 1976, by college dropouts

Steve Jobs and Steve Wozniak, who brought to the new company a vision of

changing the way people

viewed computers. Jobs and

Wozniak wanted to

kihmake computers small

enough for people to have

them in their homes or

offices.

Business description

Apple business overview from the company’s financial report:

“The Company designs, manufactures, and markets mobile communication and media devices,

personal computers, and portable digital music players, and sells a variety of related software,

services, peripherals, networking solutions, and third-party digital content and applications. The

Company’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple TV®, a

portfolio of consumer and professional software applications, the iOS and OS X® operating

systems, iCloud®, and a variety of accessory, service and support offerings. The Company also

sells and delivers digital content and applications through the iTunes Store®, App Store™,

iBooks Store™, and Mac App Store. The Company sells its products worldwide through its retail

stores, online stores, and direct sales force, as well as through third-party cellular network

carriers, wholesalers, retailers, and value-added resellers. In addition, the Company sells a

variety of third-party iPhone, iPad, Mac and iPod compatible products, including application

software, and various accessories, through its online and retail stores. The company sells to

consumers; small and mid-sized businesses (“SMB”); and education, enterprise and government

customers.

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The Company is committed to bringing the best user experience to its customers through its

innovative hardware, software and services. The Company’s business strategy leverages its

unique ability to design and develop its own operating systems, hardware, application software

and services to provide its customers products and solutions with innovative design, superior

ease-of-use and seamless integration. The

Company believes a high-quality buying

experience with knowledgeable salespersons

who can convey the value of the Company’s

products and services greatly enhances its

ability to attract and retain customers.

Therefore, the Company’s strategy also

includes building and expanding its own

retail and online stores and its third-party

distribution network to effectively reach

more customers and provide them with a

high-quality sales and post-sales support

experience. The Company believes ongoing

investment in research and development

(“R&D”), marketing and advertising is

critical to the development and sale of

innovative products and technologies.”

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Apple’s Vision Statement

Apple’s current vision statement was introduced by CEO Tim Cook, who stated, “We

believe that we are on the face of the earth to make great products and that’s not

changing. We are constantly focusing on innovating. We believe in the simple not the

complex. We believe that we need to own and control the primary technologies behind

the products that we make, and participate only in markets where we can make a

significant contribution. We believe in saying no to thousands of projects, so that we can

really focus on the few that are truly important and meaningful to us. We believe in deep

collaboration and cross-pollination of our groups, which allow us to innovate in a way

that others cannot. And frankly, we don’t settle for anything less than excellence in every

group in the company, and we have the self- honesty to admit when we’re wrong and the

courage to change. And I think regardless of who is in what job those values are so

embedded in this company that Apple will do extremely well.”

Apple’s vision statement is considerably detailed and reflects the company’s comprehensive

approach in ensuring continued growth and success. For instance, the vision statement

enumerates a number of major points, such as the emphasis on innovation, which directly relates

with Apple’s rapid innovation strategy. In addition, the vision statement specifies simplicity,

which is also an integral aspect of the company’s approach to product design and development.

Apple is known for user-friendly and easy-to-use products that help improve daily activities. For

instance, the simplicity of the design of iPhone and iOS make it easy to communicate, use apps,

and access the Internet. Moreover, Apple’s vision statement shows careful selection of markets.

This factor reflects the firm’s use of market research to guide decision-making in product

development and strategic formulation. Also, even organizational culture is included in this

vision statement. Apple highlights employees’ collaboration and excellence as keys to its

business. This detailed vision

Statement is quite comprehensive in addressing the different aspects of Apple’s business. It

effectively shows the holistic approach of the company’s leaders. Thus, based on conventions on

vision statement construction, Apple’s vision statement is satisfactory because it clearly shows

the direction of the company. This direction is stated for the business as a whole, as well as the

various aspects or components of Apple’s organization. Such a detailed vision statement is

beneficial to business because it helps guide decision-makers and other employees in working

toward the desired condition, which in this case is a condition of Apple’s continued global

success based on excellence and innovation.

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Apple’s Mission Statement

Apple’s mission statement has also changed over time. The company considers the

changing business landscape, which influences the possibilities of what Apple can do. The

company recognizes the changing market and industry. Apple’s current mission statement is,

“Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork

and professional software. Apple leads the digital music revolution with its iPods and iTunes

online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App

store, and is defining the future of mobile media and computing devices with iPad.”

Apple’s mission statement is very specific in indicating what the company does and will do.

Details about certain product lines are included to show the firm’s current condition. The mission

statement mentions Macs, OS X, iLife, iWork, and others. These details are important in

recognizing and setting the baseline for future actions that

Apple will implement. These future actions are also provided in detail. The mission statement

includes details about what Apple intends to do in its various businesses. For example, the firm

states that it is “defining

The future of mobile media and computing devices.” This part of the mission statement shows

that Apple plans to continue focusing its research and development on mobile devices and

related media. Such mobile media may include online media via iTunes, which is accessible

through mobile devices like iPad and iPhone. These points show that Apple’s mission statement

is accurate in depicting the company’s situation and goals. However, the mission statement is

quite narrow in representing possibilities for Apple, which is currently in the best position to

explore a wider variety of options. It is also worth noting that this mission statement is a

departure from Steve Jobs’ original mission for the company: “To make a contribution to the

world by making tools for the mind that advance humankind.” Apple’s mission statement has

shifted away from a general picture of the business, toward a specific reflection of what it wants

to achieve in terms of goods and services.

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Exclusive Summary

Industries served

Computer hardware (Mac, iMac, Mac Pro, MacBook, MacBook

Air)

Computer software (iOS, OS X, Safari, iLife, iWork, iMovie,

iPhoto)

Consumer electronics (iPod, iPhone, iPad, Apple TV and Mac

products)

Digital distribution (iTunes store, iCloud, App Store, Mac App

Store)

Geographic areas

served

Worldwide (retail stores in 18 countries and online stores in 120

countries)

Headquarters Cupertino, California, United States

Current CEO Tim Cook

Revenue US$233.715 billion (2015) 27.85% increase over US$182.795

billion (2014)

Profit US$45.687 billion (2016) -14% decrease under US$53.394 billion

(2015)

Employees 120,000 (2016)

Main Competitors

Samsung Electronics Co., Ltd., Amazon.com, Inc., International

Business Machines Corporation, Cisco Systems, Inc., Google Inc.,

Microsoft Corporation, Dell Inc., LG Electronics, Lenovo Group

Limited, Hewlett-Packard Company, Sony Corporation and many

other computer hardware, computer software, consumer electronics

and Internet companies.

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APPLE Inc.

Income Statements Horizontal Analysis

Period Ending: 9/24/2016 9/26/2015 9/27/2014

Total Revenue $ 215,639,000 -8% $ 233,715,000 28% $ 182,795,000

Cost of Revenue $ 131,376,000 -6% $ 140,089,000 25% $ 112,258,000

Gross Profit $ 84,263,000 -10% $ 93,626,000 33% $ 70,537,000

Operating Expenses

Research and Development $ 10,045,000 25% $ 8,067,000 34% $ 6,041,000

Sales, General and Admin. $ 14,194,000 -1% $ 14,329,000 19% $ 11,993,000

Operating Income $ 60,024,000 -16% $ 71,230,000 36% $ 52,503,000

Add income/expense items $ 1,348,000 5% $ 1,285,000 31% $ 980,000

Earnings Before Interest

and Tax $ 61,372,000 -15% $ 72,515,000 36% $ 53,483,000

Interest Expense $ - 0% $ - 0% $ -

Earnings Before Tax $ 61,372,000 -15% $ 72,515,000 36% $ 53,483,000

Income Tax $ 15,685,000 -18% $ 19,121,000 37% $ 13,973,000

Net Income-Continuing

Operations $ 45,687,000 -14% $ 53,394,000 35% $ 39,510,000

Net Income $ 45,687,000 -14% $ 53,394,000 35% $ 39,510,000

Interpretation:

1) Total revenues increased 28% at 2015 because the huge sales of IPhone 6, which

decreased at 2016.

2) Gross Profit increased 33% at 2015 and that percentage is bigger than 28% because the

revenues collected from ITunes and ITv, and decreases at 2016 and that is a reflection of

decreasing in total sales.

3) Operating Income decreased by 16% at 2016 because decreasing of Total revenues and

increasing of Research and development expenses.

4) EBIT increased 36% at 2015 and decreased by 15% at 2016.

5) Net income increased by 35% at 2015, that is a reflect of increasing in revenues. And

decreased by 14% because of decreasing in Total Revenues and Increasing in Income

Tax Percentage.

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APPLE Inc.

Income Statements Vertical Analysis

Period Ending: 9/24/2016 9/26/2015

Total Revenue $ 215,639,000 100% $ 233,715,000 100%

Cost of Revenue $ 131,376,000 61% $ 140,089,000 60%

Gross Profit $ 84,263,000 39% $ 93,626,000 40%

Operating Expenses

Research and Development $ 10,045,000 5% $ 8,067,000 3%

Sales, General and Admin. $ 14,194,000 7% $ 14,329,000 6%

Operating Income $ 60,024,000 28% $ 71,230,000 30%

Add income/expense items $ 1,348,000 1% $ 1,285,000 1%

Earnings Before Interest and Tax $ 61,372,000 28% $ 72,515,000 31%

Interest Expense $ - 0% $ - 0%

Earnings Before Tax $ 61,372,000 28% $ 72,515,000 31%

Income Tax $ 15,685,000 7% $ 19,121,000 8%

Net Income-Continuing

Operations $ 45,687,000

21% $ 53,394,000

23%

Net Income $ 45,687,000 21% $ 53,394,000 23%

Interpretation:

1) Cost of revenues increased at 2016 because of changing some of raw materials.

2) Gross profit decreases at 2016 reflection of the cost of revenues.

3) Operating Income decreases at 2016 because the cost researches and Development

increased.

4) The debts that Apple borrows comes with No interest so the lenders can get some

specifications.

5) Net Income-Continuing Operations slightly decrease at 2016.

6) Net income slightly decrease because increasing the cost of researches and Tax from 3.8

to 3.9.

January 5, 2017

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APPLE Inc.

Financial position statements Horizontal Analysis

Period Ending: 9/24/2016 9/26/2015 9/27/2014

Current Assets

Cash and Cash Equivalents $ 20,484,000 -3% $ 21,120,000 53% $ 13,844,000

Short-Term Investments $ 46,671,000 128% $ 20,481,000 82% $ 11,233,000

Net Receivables $ 29,299,000 -3% $ 30,343,000 -4% $ 31,537,000

Inventory $ 2,132,000 -9% $ 2,349,000 11% $ 2,111,000

Other Current Assets $ 8,283,000 -45% $ 15,085,000 54% $ 9,806,000

Total Current Assets $ 106,869,000 20% $ 89,378,000 30% $ 68,531,000

Long-Term Assets

Long-Term Investments $ 170,430,000 4% $ 164,065,000 26% $ 130,162,000

Fixed Assets $ 27,010,000 20% $ 22,471,000 9% $ 20,624,000

Goodwill $ 5,414,000 6% $ 5,116,000 11% $ 4,616,000

Intangible Assets $ 3,206,000 -18% $ 3,893,000 -6% $ 4,142,000

Other Assets $ 8,757,000 62% $ 5,422,000 44% $ 3,764,000

Total Assets $ 321,686,000 11% $ 290,345,000 25% $ 231,839,000

Current Liabilities

Accounts Payable $ 59,321,000 -2% $ 60,671,000 25% $ 48,649,000

Short-Term Debt / Current

Portion of Long-Term Debt $ 11,605,000 6% $ 10,999,000 74% $ 6,308,000

Other Current Liabilities $ 8,080,000 -10% $ 8,940,000 5% $ 8,491,000

Total Current Liabilities $ 79,006,000 -2% $ 80,610,000 27% $ 63,448,000

Long-Term Debt $ 75,427,000 41% $ 53,329,000 84% $ 28,987,000

Other Liabilities $ 36,074,000 8% $ 33,427,000 35% $ 24,826,000

Deferred Liability Charges $ 2,930,000 -19% $ 3,624,000 20% $ 3,031,000

Total Liabilities $ 193,437,000 13% $ 170,990,000 42% $ 120,292,000

Stock Holders Equity

Common Stocks $ 31,251,000 14% $ 27,416,000 18% $ 23,313,000

Capital Surplus $ - $ - $ -

Retained Earnings $ 96,364,000 4% $ 92,284,000 6% $ 87,152,000

Treasury Stock $ - $ - $ -

Other Equity $ 634,000 -

284% $ (345,000)

-

132% $ 1,082,000

Total Equity $ 128,249,000 7% $ 119,355,000 7% $ 111,547,000

Total Liabilities & Equity $ 321,686,000 11% $ 290,345,000 25% $ 231,839,000

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Interpretation:

1) Cash hugely increased by 53% at 2015 because of the big sales of Iphone6, at 2016 Cash

decreased 3%.

2) Total Current Assets increased at 2015 by 30% and keeps increasing by 20% at 2016.

3) Apple`s Goodwill increased by 20% at 2016, And that is a result of High Quality

Products And services

4) Apple`s Total Assets Outgrew by 25% at 2015 and 11% at 2016 That’s a sign of growth

and success.

5) Total liability increased by 42% Because of bond offering at 2015 and by 13% at 2016.

6) Total Equity is stabile increasing by 7% at 2015 and 2016.

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APPLE Inc.

Financial position statements Vertical Analysis

Period Ending: 9/24/2016 9/26/2015

Current Assets

Cash and Cash Equivalents $ 20,484,000 6% $ 21,120,000 7%

Short-Term Investments $ 46,671,000 15% $ 20,481,000 7%

Net Receivables $ 29,299,000 9% $ 30,343,000 10%

Inventory $ 2,132,000 1% $ 2,349,000 1%

Other Current Assets $ 8,283,000 3% $ 15,085,000 5%

Total Current Assets $ 106,869,000 33% $ 89,378,000 31%

Long-Term Assets

Long-Term Investments $ 170,430,000 53% $ 164,065,000 57%

Fixed Assets $ 27,010,000 8% $ 22,471,000 8%

Goodwill $ 5,414,000 2% $ 5,116,000 2%

Intangible Assets $ 3,206,000 1% $ 3,893,000 1%

Other Assets $ 8,757,000 3% $ 5,422,000 2%

Total Assets $ 321,686,000 100% $ 290,345,000 100%

Current Liabilities

Accounts Payable $ 59,321,000 18% $ 60,671,000 21%

Short-Term Debt / Current

Portion of Long-Term Debt $ 11,605,000 4% $ 10,999,000 4%

Other Current Liabilities $ 8,080,000 3% $ 8,940,000 3%

Total Current Liabilities $ 79,006,000 25% $ 80,610,000 28%

Long-Term Debt $ 75,427,000 23% $ 53,329,000 18%

Other Liabilities $ 36,074,000 11% $ 33,427,000 12%

Deferred Liability Charges $ 2,930,000 1% $ 3,624,000 1%

Total Liabilities $ 193,437,000 60% $ 170,990,000 59%

Stock Holders Equity

Common Stocks $ 31,251,000 10% $ 27,416,000 9%

Capital Surplus $ - 0% $ - 0%

Retained Earnings $ 96,364,000 30% $ 92,284,000 32%

Treasury Stock $ - 0% $ - 0%

Other Equity $ 634,000 0.2% $ (345,000) -

0.12%

Total Equity $ 128,249,000 40% $ 119,355,000 41%

Total Liabilities & Equity $ 321,686,000 100% $ 290,345,000 100%

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Interpretation:

1) Cash slightly decrease by 1% but it remains high.

2) Inventory at 2015,2015 is stabile witch indicate a good percentage of sales

3) Total Current Assets increased by 2% the highest amount was Short term Investment that

increased to double

4) Long Term Investment is high because Apple in planning to build a new company center

in California using these long term investments.

5) Fixed Assets and Goodwill and Intangible Assets percentages are stable.

6) Total current Liability decreased by 3%.

7) Total Liability was slightly increase by 1%.

8) Retained Earnings increased as Cash by decreased by percentage.

9) There is no Treasury’s stocks and is a good sign about Apple`s Shares.

10) Total Equity increased as Amount but slightly decreases as percentage by 1%.

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Financial ratios:

Net Working Capital Ratio =

2016 2015 Different

$ 27,863,000 $ 8,768,000 $ 19,095,000

Interpretation: Working capital is a measure of both a company's efficiency and its short-

term financial health. Apple`s Net working capital hugely increased by $19.095.000 to become

27.863.000 by 2016.

Current Ratio =

2016 2015 Different

1.35 1.11 0.24

Interpretation: Current ratio tells us the short term liquidity of the firm and tells the ability

of the firm to pay its short term obligations. Apple has the 1.35 ability to repay against the $1

loan. Comparing to 2015 the repaying ability increased by 0.24 which means the company is

growing.

Quick Ratio =

2016 2015 Different

0.23 0.23 0

Interpretation: Quick ratio measures the firm’s ability to pay off short term obligations

without relying on the sale of inventory. Apple has a 0.23 quick ratio at 2016 the same percent at

2015, That’s is an indicator about the stability of the firm.

Cash Ratio =

2016 2015 Different

85% 52% 33%

Interpretation: Apple`s ability to pay its debt without selling any of the Assets increased by

33% to become 85% at 2016.

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑒𝑠

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑎𝑠𝑠𝑒𝑡𝑠 − 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝑐𝑢𝑟𝑒𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑐𝑎𝑠ℎ +𝑀. 𝑆

𝑐𝑢𝑟𝑟𝑒𝑛𝑡 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

January 5, 2017

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Account Receivable

Turnover =

2016 2015 Different

7 Times 8 Times -1 Time

Interpretation: This ratio indicates the firm`s receivables efficiency, Apple`s account

receivable turnover decreases by 1 Time at 2016 from 8 times at 2015. But though it`s remains a

high percentage and its and an indicator of the efficiency of management.

Account Receivable Turnover

In Days =

2016 2015 Different

51 Days 45 Days 6 Days

Interpretation: This ratio show that Apple receive Its receivables every 51 Days at 2016

Simple decline of performance comparing to 45 Days at 2015.

Inventory Turnover =

2016 2015 Different

59 Times 63 Times -4 Times

Interpretation: The inventory turnover of Apple is 59 Times in 2016 agilest 63 Times at

2015, That is a decrease but it remains a super high percentage though.

Inventory Turnover In Days =

2016 2015 Different

6 Days 7 Days 1 Day

Interpretation: Apple`s inventory is sold and repurchased every 6 Days at 2016, It

decreases by 1 Day from 2015, though it remains a super high percentage.

360

𝐴𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟

𝐶𝑂𝐺𝑆

𝐴𝑉𝐺. 𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

360

𝑖𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

𝐴𝑣𝑔. 𝐺𝑟𝑜𝑠𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠

January 5, 2017

16

Operating Cycle =

2016 2015 Different

56 Days 55 Days 2 Days

Interpretation: Apple`s ability to make sales and collect its receivables simply increases

by 1 Day at 2016 to become every 56 Days, And its considered as bad sign but though it remains

a really excellent percentage.

Sales To Working Capital =

2016 2015 Different

7.1 3.3 3.8

Interpretation: Indicates a company's effectiveness in using its working capital, Apple`s

sales to working capital increased by 3.8 to become 7.1 at 2016.

Total Debt Ratio =

2016 2015 Different

60% 59% 1%

Interpretation: Total Debt ratio shows if the firms have more assets regardless of total

debt than that firm will easily pay off its debts. Apple`s ability to pay debt slightly decreases by

1% to become 60% at 2016.

Debt To Equity =

2016 2015 Different

108% 104% 4%

Interpretation: Debt to equity ratio shows the comparison to equity this ratio tells that how

much firm has ability to pay its debt and if equity is more than the total debt of the firm so firm

will face low risk. Apple`s debt to equity ratio increases by 30% from 2015 to become 108%.

And that is not a good sign.

𝐴𝑐𝑐. 𝑅𝑒𝑐. 𝑡𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑖𝑛 𝑑𝑎𝑦𝑠 + 𝐼𝑛𝑣. 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑖𝑛 𝑑𝑎𝑦𝑠

𝑁𝑒𝑡 𝑠𝑎𝑙𝑒𝑠

𝐴𝑣𝑔. 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑐𝑎𝑝𝑖𝑡𝑎𝑙

𝑇𝑜𝑡𝑎𝑙 𝑙𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

𝑇𝑜𝑡𝑎𝑙 𝑎𝑠𝑠𝑒𝑡𝑠

𝑇𝑜𝑡𝑎𝑙 𝐷𝑒𝑏𝑡

𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦

January 5, 2017

17

Times Interest Earned =

2016 2015 Different

---------- ---------- ----------

Cash Coverage Ratio =

2016 2015 Different

---------- ---------- ----------

Interpretation: The debts that Apple Borrows comes with NO INTREST.

Gross Profit Margin =

2016 2015 Different

39.1% 40.1% -1.0%

Interpretation: It tells that how much a firm will receive against $ 1 sales. Apple was

earning 40.1% at 2015 decreases to 39.1% at 2016. That’s decreasing by 1%.

Net Profit Margin =

2016 2015 Different

21.2% 22.8% -1.7%

Interpretation: this ratio shows how much each $1 of Net sales is generated to Net

Income, Apple is able to generate 21.2% net income from its Net sales by decreasing 1.7% from

2015.

Operating Income Margin =

2016 2015 Different

27.8% 30.5% -2.6%

Interpretation: this ratio shows how much each $1 of Operating Income is generated to

Net Income, Apple is able to generate 27.8% net income from its Net sales by decreasing 2.6%

from 2015.

𝐸𝐵𝐼𝑇

𝐼𝑛𝑡𝑟𝑒𝑠𝑡

𝐸𝐵𝐼𝑇 + 𝐷𝑒𝑝𝑟𝑒𝑡𝑖𝑡𝑖𝑜𝑛

𝐼𝑛𝑡𝑟𝑒𝑠𝑡

𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

January 5, 2017

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Total Assets Turnover =

2016 2015 Different

70.5% 89.5% -20.0%

Interpretation: is an indicator of how much the company’s sales or revenues generated

relative to the value of its Total Assets And how efficiency is the management of the firm.

Apple`s total assets turn over decreases by 20% to become 70.5% at 2016, And that is not a

good sign. But it remains a high percentage.

Operating Assets Turnover =

2016 2015 Different

8.71% 10.84% -2.13%

Interpretation: is an indicator of how much the company’s sales or revenues generated

relative to the value of its Operating Assets And how efficiency is the management of the firm.

Apple`s Operating assets turn over decreases by 2.13% to become 8.71% at 2016, And that is

not a good sign.

Return On Equity =

2016 2015 Different

36% 45% -9%

Interpretation: ROE measures a firm's profitability by revealing how much profit a

company generates with the money shareholders have invested. Apple`s ROE decreases by 9%

at 2016 to become 36%, And that is not a good sign, that is a reflect of decreasing in total

revenue.

Return On Assets =

2016 2015 Different

15% 20% -6%

Interpretation: ROA shows how efficient is the Management of the firm using the assets

to generate Net Profit, And that`s a decrease by 5% at 2016 to become 15%, that is a reflect of

decreasing in total revenue.

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

𝐴𝑣𝑔. 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠

𝐴𝑣𝑔. 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐴𝑠𝑠𝑒𝑡𝑠

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝐴𝑣𝑔. 𝑇𝑜𝑡𝑎𝑙 𝐸𝑞𝑢𝑖𝑡𝑦

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝐴𝑣𝑔. 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

January 5, 2017

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Return On Operating Assets =

2016 2015 Different

18.5% 24.7% -6.20%

Interpretation: This ratio shows how efficient is the Management of the firm using the

operating assets to generate Net Profit, And that`s a decrease by 0.62% at 2016 to become

18.5%, that is a reflect of decreasing in total revenue.

DuPont Analysis =

2016 2015 Different

14.9% 20.5% -5.6%

Interpretation: assets are measured at their gross book value rather than at net book value

to produce a higher return on equity. Apple`s DuPont Analysis decrease 5.6% to become 14.9%

at 2016.

DuPont Operating Assets =

2016 2015 Different

2.42% 3.30% -0.88%

Interpretation: Operating assets are measured at their gross book value rather than at net

book value to produce a higher return on equity. Apple`s DuPont Operating Analysis decrease

0.88% to become 2.42% at 2016.

EPS =

2016 2015 Different

8.31 9.22 -0.91

Interpretation: Earnings per share (EPS) is the portion of a company's profit allocated to

each outstanding share of common stock. Earnings per share serves as an indicator of a

company's profitability, EPS decreased by 0.91 that’s refers to decreasing in Net Income at 2016

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒

𝐴𝑣𝑔. 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐴𝑠𝑠𝑒𝑡𝑠

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 𝑥 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑢𝑟𝑛𝑂𝑣𝑒𝑟

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒 𝑀𝑎𝑟𝑔𝑖𝑛 𝑥 𝑂𝑝𝑟𝑎𝑡𝑖𝑛𝑔𝐴𝑠𝑠𝑒𝑡𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒 − 𝑃𝑟𝑒𝑓𝑒𝑟𝑒𝑑 𝑆ℎ𝑎𝑟𝑒𝑠 𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠

𝑊𝑒𝑖𝑡𝑒𝑑 𝐴𝑣𝑔. 𝑂𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔 𝑆ℎ𝑎𝑟𝑒𝑠

January 5, 2017

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Price caring Ratio P/E =

2016 2015 Different

14.08 14.73 -0.65

Interpretation: PE ratio shows current investor demand for a company share. A high PE

ratio generally indicates increased demand because investors anticipate earnings growth in the

future. Which is a good sign to the company.

Dividends yield =

2016 2015 Different

2.10%

1.70%

0.40%

Interpretation: By investing in companies with stable and high dividend yields, investors can

secure a relatively stable cash flow. However, dividend yields can be high when a company is

facing financial trouble, and the company may cut the dividend in the near future. Apple`s

Dividends Yield increased 0.40% at 2016 to become 2.10% witch is a good sign.

Dividends Payout =

2016 2015 Different

0.57 0.52 0.05

Interpretation: The dividend payout ratio provides an indication of how much money a

company is returning to shareholders, versus how much money it is keeping on hand to reinvest

in growth, Apple`s Dividends Payout increased by 0.05 to become 0.57 at 2016.

𝑀𝑎𝑟𝑘𝑒𝑡 𝑃𝑟𝑖𝑐𝑒 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒

𝐸𝑃𝑆

𝐷𝑖𝑣𝑒𝑑𝑒𝑛𝑑𝑠 𝑝𝑒𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘

𝑚𝑎𝑟𝑘𝑒𝑡 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑠𝑡𝑜𝑐𝑘

𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑𝑠 𝑝𝑒𝑟 𝑐𝑜𝑚𝑚𝑜𝑛 𝑆𝑡𝑜𝑐𝑘

𝐸𝑃𝑆

January 5, 2017

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SWOT Analysis

Strengths

1. The major strength of Apple has its strong market position and consumer trustworthiness

which raises due to “Apple’s ecosystem”, which in turn to increased Company’s competitive

advantage. Second, Apple has a full variety of software, products and apps which are interlinked

and maintain each other. Third, iTV and other new products will be released soon.

2. In 2012, 3rd time Apple chosen as the most pioneering company in the world.

3. At the end of 2012, Apple holds approximately $10,000,000,000 in cash. Company has no

debts and the gross profit margin is also higher than its competitors.

4. Apple was the second valuable brand in 2012 and its brand value was at $76.5 billion.

5. High quality customer experience is a key of Apple’s retail store by providing a direct speak

towel-informed staff which increased brand awareness.

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Weaknesses

1. High price is the major weakness of Apple because there is a strong completion in market

now, and the consumer of Apple products can easily obtain the similar function products by its

competitors in a lower price.

2. Decreasing market share can be caused to less influence its customers to using closed

ecosystem of Apple.

3. Apple Company is often blamed by other companies to disobeying their patents and also it has

lost some trials as well. Such type of things can damage Apple’s reputation in market.

4. In 2012, Tim Cook became a new CEO because of the death of Steve Jobs, which was the

biggest loss for Apple Company. After some time John Browed and Scott Forstall left the firm,

this will have a negative impact on management.

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Opportunities

1. Apple’s market share will be increase due to high demand of iPad and iPad mini in tablet

market and this will help company to use as competitive advantage.

2. Apple TV sales will be increased by the launch of iTV which will release soon.

3. Smartphone and tablet markets are growing which is a good opportunity for Apple to expand

their market share in these markets.

4. Collecting damages from competitors because companies sometimes violated Apple’s patent.

So such types of factors can be used by Apple as to damage the competitor’s image on market

and collecting damages from them will led to increase cash reserves as well.

5. The growth of mobile advertising is an opportunity and Apple allows advertising on iPod

touch, iPhone and iPad by developing the platform named iPad advertising.

6. The requirement of cloud based services is increasing, so Apple can enlarge its services relate

to iCloud and software as well (Strategic Management Insight, 2013).

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Threats

1. Rapid technological change is the biggest threat which Apple and its competitors are

experiencing now days. As customers are become more technology lover and they want more

and more new products in very short time due to this, companies are facing pressure. So

competitions very high and the one who cannot remain themselves with rivalry shortly

be unsuccessful.

2. Increment in Tax in USA will affect the Apple’s growth.

3. Samsung is the only one who provides application processors to Apple and it has asked to pay

higher price for it. It should be asked Apple to pay more because there are no feasible substitutes

who could provide Apple to application processors (Jung, 2012).

4. The main competitor of iOS is Android OS in mobile market. The power of Apple iOS can be

dominated by Android OS.

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Market Share Price

P/E Ratio (TTM) 14.08 (12/30/16) EPS (TTM) $8.27 Market Cap $622.44 B Shares Outstanding $5.33 B Public Float $5.33 B Yield 2.1% (12/30/16) Latest Dividend $ 2.18 (11/10/16) Ex-Dividend Date 05/03/17

PER-SHARE EARNINGS, ACTUALS AND ESTIMATES

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Conclusion and Recommendation

In brief Apple Company is very innovative and early adapters and it is typically the

foremost company who takes new innovative products as compared to other companies. These

types of things usually considered as more risky but it appears to be functioning as Apple’s

advantage.

Strong market position and consumer loyalty which increased due to closed ecosystem and user

friendly products makes different to Apple Company from its competitors.

Another most important factor is that the Apple Company is the “First most admired company”

In the world. Whereas, it is also credited to first sustainable music downloading business model

in history by its iPod and iTunes online media store.

.

References:

http://www.nasdaq.com/symbol/aapl/financials?query=balance-sheet

https://www.google.com/finance?fstype=ii&q=nasdaq:aapl