Apple Business Analysis 2

BUSINESS ANALYSIS PART 2: APPLE COMPUTER INCORPORATION

Business Analysis Part 2: Apple Computer Incorporation

Student Name

MGT/521

June 2, 2012

Hoda Bagdady-Asal, Ph.D.

Business Analysis Paper Part 2: Apple Computer Incorporation

Apple Incorporated, manufacture, and market a variety of electronic gadgets to include personal computers, portable digital music, mobile communication devices, and video players to include a few. The company also sells computer software, technical services, networking solutions, and peripherals. Tim Worstall, who writes articles about technology and business, wrote an article about Apple that was published in Forbes magazine. The article stated that "Apple's iPhone business single-handedly is larger than Microsoft's businesses combined." He also stated that Apple did not make this accomplishment by replacing Windows or Microsoft Office products; however Apple has accomplished their success with new innovative products that Microsoft or any other technological company was to providing to consumers. According to Tim Worstall, monopolies tend to fall not when they are beaten in their own market but when their market becomes only a subset of a wider one, when advancing technology makes the monopolist's position almost irrelevant (Worstall, 2012)

Apple has also has for the fourth straight year included in the list as Fortune's most admired list of businesses. Apples fast pace of new products being released has continued to set the bar high for technical companies for new consumer high technical innovative gadgets. Apple has reported over $65 million in revenue with over $14 million in profits, gaining a rank of 35th in the 2011 Fortune 500 list of companies. Apple has reported a growth of more than 57% in the company's earnings per share between the years of 2005 and 2010. In the list for growing companies for a five-year comparison period Apple ranked first place. In the list of the most profitable companies list, Apple ranked 27th place.

Income Statement, Balance Sheet, Cash Flow

Reviewing the company's Income Statement, Balance Sheet, and Cash Flow statement disclose that the company is the fastest growing company worldwide. The company had a net income of over $25 billion dollars on its 2011 financials. This was an increase of over 85% compared to 2010. The company's Balance sheet shows their long term liabilities are less than 50% of the company's net reported income for 2010, making the company's investors very happy. In 2011 apple increased the amount of capital it invested causing a shift in long term assets to increase compared to 2010.

The Balance sheet in 2011 reported a ratio of 1.61 that is 0.5 lower than the previous year for 2010. This could very well be contributed to the increased investment of capital into long- term investments.

A comparison of Apple's financial statement alongside Microsoft and Google illustrate Apple is foremost in lead financially in Net Revenue, Net Income after Taxes, Retained Earnings, Total Assets, and Share Holder's Equity. Apple's Return on Equity is superior to Google; however slightly it is less than Microsoft. Basic Earnings Share may be lower than Google, however when comparing to Microsoft and last year's Earnings per Share of Apple, the company is in a much better position. Microsoft financials are in a better position for Return on Equity, Return on Sales; however, Apple is leading and has a better Debt Equity ratio than Microsoft.

In the mobile phone market Apple competes with Google, in the personal computer market Apple competes with Microsoft. In the following table Google, Apple and Microsoft financials are revealed for the years 2010 and 2011.

Comparative Financial Statement for Google, Apple, and Microsoft

|2011 |2010 | |2011 |2010 | |2011 |2010 | | |Income | | | | | | | | | | | | | | | | | | | | | |Revenue |37.91 |29.32 |8.59 |108.25 |65.22 |43.03 |69.94 |62.48 |7.46 | |Gross Profit |24.72 |18.9 |5.82 |43.82 |25.68 |18.14 |54.37 |50.09 |4.28 | |R& D Expense |5.16 |3.76 |1.4 |2.43 |1.78 |0.65 |9.04 |8.71 |0.33 | |Total Operating Expenses |26.16 |18.94 |7.22 |74.46 |46.84 |27.62 |42.78 |38.39 |4.39 | |Operating Income |11.74 |10.38 |1.36 |33.79 |18.39 |15.4 |27.16 |24.1 |3.06 | |Net Income |9.74 |8.51 |1.23 |25.92 |14.01 |11.91 |23.15 |18.76 |4.39 | | | | | | | | | | | | |Assets | | | | | | | | | | | | | | | | | | | | | |Total Current Assets |52.76 |41.56 |11.2 |44.99 |41.68 |3.31 |74.92 |55.68 |19.24 | |Total Long Term Assets |19.82 |16.29 |3.53 |71.38 |33.51 |37.87 |33.79 |30.44 |3.35 | |Total Assets |72.57 |57.85 |14.72 |116.37 |75.18 |41.19 |108.7 |86.11 |22.59 | | | | | | | | | | | | |Liabilities | | | | | | | | | | | | | | | | | | | | | |Total Current Liabilities |8.91 |10 |-1.09 |27.97 |20.72 |7.25 |28.77 |26.15 |2.62 | |Total Long Term Liabilities |5.52 |1.61 |3.91 |11.79 |6.67 |5.12 |22.85 |13.79 |9.06 | |Total Liabilities |14.43 |11.61 |2.82 |39.76 |27.39 |12.37 |51.62 |39.94 |11.68 | | | | | | | | | | | | |Common Shares Outstanding |324.89M |321.30M |3.59M |929.28M |915.97M |13.31M |8.38 |8.67 |-0.29 | |Common Stock, Net |20.26 |18.23 |2.03 |13.33 |10.67 |2.66 |63.41 |62.86 |0.55 | |Retained Earnings |37.6 |27.87 |9.73 |62.84 |37.17 |25.67 |-6.33 |-16.68 |10.35 | |Shareholder's Equity |58.15 |46.24 |11.91 |76.61 |47.79 |28.82 |57.08 |46.17 |10.91 | | | | | | | | | | | | |Total Liabilities &

Shareholder's Equity |72.57 |57.85 |14.72 |116.37 |75.18 |41.19 |108.7 |86.11 |22.59 | | | | | | | | | | | | |Cash Flow | | | | | | | | | | | | | | | | | | | | | |from Operating Activities |14.56 |11.08 |3.48