Financial Statement Analysis
Financial statement analysis refers to developing and analyzing a particular companys financial statements to help with the decision-making processes. It is also essential since it helps external stakeholders such as investors understand its overall condition and evaluate the business value and financial performance. Internally, it is used as a tool to monitor and manage the organizations finances. A companys financial statements record essential financial data on all organizations activities (Kunnathur, 2017). They can be evaluated based on past, present, or future performance. They are generally centered on the generally accepted accounting principles.
Apple Inc. Financial Analysis
Company Background
This is a multinational technology company with its headquarters in Cupertino, California. It is an American company established in 1977 by Wozniak and Steve Jobs, a great American visionary who aimed to change the world and use technology. His vision of entrepreneurship led to the creation of the essential technological advancement on earth. He was the co-founder and the chief executive officer of Apple Inc. The two were the principal founders of the company, alongside Ronald Wayne, whose contribution to the creation of the iPhone, iMac, and iPad cannot be ignored. Apple Inc. is a publicly-traded company whose products are sold through the companys retail stores, the Apple Store, direct sales force and online stores, and the cellular network sellers and wholesalers. It also retails to mid-sized and small businesses, clients, education, management, and initiative trades (Hernndez-lvarez, Hernndez & Yoo, 2019).
Initially, the company ventured into the production of Apple computers. The founders aimed to make small and portable computers for people to use easily at their places of work and their homes. In addition, they sought to change the design of the machine and create one that was human-friendly. However, the response they received upon launching this project was discouraging, but they did not stop. They continued working hard to meet every demand of customers and later introduced Apple II. This product revolutionized the technology industry, particularly the computer industry, and the companys sales shot from 7.8 million USD in 1978 to 117 million USD in 1980. The company went public from this point. In the early 1990s, the company recorded its highest profits because of Jobs entrepreneurial and innovation skills (Kunnathur, 2017).
Apple Inc.s Industry Outlook
The company creates, develops, and sells various technology devices and mobile communication tools, and computer devices for users and different business sizes. It also specializes in designing and developing software and technology accessories, application and digital content, portable personal computers, services, and other network solutions (Khan & Alum, 2014). Some of the companys products include the tvOS, watchOS, macOS, and iOS. The different software and application have logic pro X and filmmaker pro. In addition, the applications by the company include Apple play, AppleCare, and the iCloud service. Currently, it is among the worlds largest and most valuable technology companies alongside Amazon, Google, Facebook, and Microsoft. As of 2021, the company has been placed as the fourth largest personal computer vendor globally and the most significant technology company by revenue.
As of the 2020 annual financial report, the company has a total revenue of 274.5 billion dollars, making it the most significant technology company. In 2018, it was the first publicly traded company in the United States to be placed at a value of more than one trillion dollars. Two years later, it became the first publicly-traded company in the United States to be set at a value of over two trillion dollars (Hernndez-lvarez, Hernndez & Yoo, 2019). The company has been ranked the most valuable brand globally and has a high brand loyalty level. As of 2021, over 1.65 billion products branded Apple are used around the world. Being a publicly-traded company, it is under constant criticism about its environmental practices, contractors practices, and ethical behavior, including materials sourcing and anti-competitive behavior.
Apple Inc.s Analyst Forecast
As of June 2021, about forty analysts are currently offering a price forecast for 12 months. Their current analysis has placed Apple Inc. at a median target of 160.00 coupled with an estimate, high enough at 185.00. The analysis has also set the multinational company at a low estimate of about 90.00. This estimate of the median represents an increment of about +23.42 from the companys previous price of 129.64. The analysts have reached a current agreement and recommend buying stock in the company, a rating that has been steady since early June 2021 and remained unchanged. The analysts have initially given their forecast in the companys fourth quarter in 2020 with a range in earnings between 0.54 and 0.86 and an estimated consensus of 0.71. The profits that were reported were about 0.73. In the fourth quarter of 2021, the analysts have made a forecast and placed the earnings per share range between 0.83 and 1.27, and an estimated consensus of 1.11. This shall be an increase in sales from the current 72.5 billion dollars.
Apples Revenue, Price, and Income Trend Analysis
The company is currently placed as the largest technology company in the world by revenue. As of 2017, the company was reported to reserve about 250 billion dollars and became the first publicly traded firm in the US and the world regarding market capitalization (Hernndez-lvarez, Hernndez & Yoo, 2019). As of 2020, the company had about 274. 5 billion dollars and 57.4 billion dollars total income, having recorded a positive increment from the figures recorded in 2019. The financial analysts have also projected this value to further increase by the end of te fourth quarter of 2021. Apple Inc. is a critical player in the technology industry,...
However, over the previous five years, the telecommunication industry has seen a stagnant growth rate, recorded at 0.0 percent. Things have mainly been made worse by the ongoing pandemic.
During the mentioned period, the firms within the technology industry have reduced by approximately 0.8 percent. Apple has, however, remained strong despite the economic challenges. Being among the major players in the technology industry, the company has recorded 247.5 billion dollars in annual sales and an extra 53 billion dollars in profits. These figures have placed the company at the top leading company, based on profitability. Moreover, the company performs best in the smartphone category, despite trailing behind Huawei and Samsung. In 2018, the companys smartphone sales accounted for 15 percent of the total smartphone share of the market. The companys revenue, price, and income trend has recorded a positive increase over the past five years and is expected to maintain the trend (Khan & Alam, 2014).
Apple Inc.s Financial Ratio Analysis
This segment will review the companys financial ratios between 2016 and 2020. The companys ratio for 2016 was at 1.86and reduced substantially over the subsequent two years to 0.8 in 2018. However, the company has made a rebound from that low ratio, and as of 2020, the companys financial ratio was at 1.36. By the end of the 2016 financial year, the companys total asset was at 0.67, a value that fell in the subsequent year, 2017, to 0.61. Fortunately, the company was able to implement measures and strategies that led to improved total asset turnover in the following three years, which led to a total asset turnover of 0.85 by the end of the 2020 financial year. The return on assets also recorded a 10.1 percent in 2016 and increased to 17.7 percent by the end of the 2020 fiscal year. Another important ratio is the companys debt ratio which has risen substantially over the years from 23.4 percent in 2016 to 30.4 percent by 2020 (Khan & Alam, 2014).
Altmans Z-score Calculation
Apple Inc.s Ethical Concerns and How to Improve
Business ethics are set ideologies or beliefs that an organizations operations are based upon. Generally, it is the responsibility of the customers, employees, stockholders, and shareholders. The fundamental principle applied by the business ethics of Apple Inc. is use good judgment. The companys mission statement clearly states that the operations to be environmentally friendly and ensure the provision of safety and health incentives to its employees. However, it has been observed that the company has failed to implement this policy, and various non-ethical cultures towards the companys employees have been reported (Hernndez-lvarez, Hernndez & Yoo, 2019). It is additionally unethical for the firm to maximize the returns received by shareholders at the employees expense. Choosing money-making over the employees lives is considered an unethical practice in its highest order. The company has further been involved in controversies overexploiting the rights of the employees (Kunnathur, 2017).
Also, the companys expendability policy comprises of great merit. Employees are made to believe that their experience in the company can guarantee them employability for a long time, but they are eventually laid off. This shows the companys policy to make its employees willing slaves while increasing shareholders. More ethical issues that have been observed include pollution and toxins, irresponsible marketing, environmental concern, and anti-social finance. For instance, in 2019, the company has the worst ecological reporting rating and included the possible use of hazardous chemicals like PVC. The company can improve its ethical performance by developing a code and making ethical practice a strategic priority. The company can also create a tool for measuring how effective its methods are and provide support to its staff and ensure that everyone abides by the ethical requirements of the company (Khan & Alam, 2015).
Recommendations
With many technology companies going down having received a blow from the ongoing pandemic, one might be nervous about making a bet on apple. One might be wondering if the company is simply an overvalued technology stock. However, the company has established a solid competitive strategy and stays ahead of challenges and competitors. This has placed it in a position of continued active growth in the years to come. The company has not indicated any sign of losing its pricing and market power. The prices of its most expensive products like the iPhones have continuously recorded steady growth in recent years. Looking at the current market share and revenues the company has coupled with the optimistic projections made by analysts, it is a good time to invest in the company and buy shares, considering that the stock is a top-notch technology company. Volatility should be expected since this is business and is controlled by market forces, but this should not be a big issue for concern since the company has recently shown a strong business performance. Its pricing power also indicates a robust performance in the coming years (Khan & Alam, 2015).
Computation
Analysts Opinions of the Companys Stock Value
Analysts say that the company is in a good position and recommends buying and owning the companys stocks rather than trading. The company has delivered excellent quarter results, and the companys stock has remained unchanging despite the recent challenges, including the coronavirus pandemic.
The Coca-Cola Company Financial Analysis
Company Background
The company is also a multination United States-based company founded by a pharmacist known as John Stith Pemberton in Atlanta, Georgia, in 1886 and has grown over the years to become among the worlds largest companies in the world manufacture and distribution of non-alcoholic beverages. In 1889, the brand and the formula were sold to Asa Griggs Candler for about 2,300 dollars, equivalent to about 67,000 dollars. Candler incorporated the company in Atlanta in 1892. It is among the most valuable brands globally and is famous for brands like sprite, diet coke, and Fanta. It has had its operations as a franchise system of distribution since Candler took over (Noor, 2020).
Industry Outlook
The company is primarily interested in retailing, manufacturing, and distribution of non-alcoholic beverages. It produces a largely concentrated syrup sold to different bottlers across the world wit exclusive territories. The anchor bottle is in North America and is called Coca-Cola Refreshments (Noor, 2020). The company has operations in the Middle…
