Such a strategy would also help the firm to address its weaknesses while acting on its strengths. Some of Apple's strengths include an innovative cast of executives and a well-known brand. Its weaknesses include significantly high R&D costs in comparison to those of competitors. Competition from makers of similar products is one of the main threats the company faces. In regard to opportunities, Apple could seek to take advantage of emerging markets to push up its sales figure.
Ratio Analysis
To further evaluate how successful Apple is, such ratios as the gross profit margin, inventory turnover, current ratio and return on equity can be taken into consideration.
Gross Profit Margin
Apple's gross profit margin can be computed by deducting C.O.G.S from the figure given for sales. The resulting figure in this case is then divided with the sales figure. Consider below.
2008 gross profit margin = 37.49B - 23.49B/37.49B = 0.37
2009 gross profit margin = 42.90B - 24.95B/42.90B = 0.42
2010 gross profit margin = 65.07B - 38.47B/65.07B = 0.41
Basically this ratio concerns itself with the gross profit sales are earning. Looking at the figures above, though the gross profit earned on sales increased in 2009 compared to 2008, it recorded a slight decline in 2010. The firm could hence be experiencing slight problems when it comes to the management of its production costs.
Inventory Turnover
Apple's inventory turnover will be computed by dividing the figure for the cost of goods sold with the figure for average inventory. Consider below.
2008 inventory turnover = 23.80B/0.509B = 46.76
2009 inventory turnover = 24.95B/0.455B = 54.84
2010 inventory turnover = 38.47B/1.05B = 36.64
This ratio helps a business to determine whether it has excessive stock. Given that the figure for inventory turnover decreased in the year 2010 in comparison to 2009, one could conclude that Apple managed its stock well in the period under consideration.
Current Ratio
Apple's current ratio can be computed by dividing the value of current liabilities with the current assets value. Consider below.
2008 current ratio...
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