Apple Inc. A companys financial reports are used for a variety of reasons, including determining how the company is doing in the financial market. You decide to?e
Apple Inc.
A company’s financial reports are used for a variety of reasons, including determining how the company is doing in the financial market. You decide to evaluate the effects of economic and market conditions on your company’s financial performance. Completing this exercise provides you with financial market research to present to your management team to inspire new KPIs and policies.
Assessment Deliverable
Use the previous year’s financial reports research you completed in Week 3.
Write a 2- to 3-page shareholder analysis in which you address the following:
- Evaluate economic conditions that influence company performance. Consider political, environmental, currency (money), global economics, and government influences on economic conditions.
- Compare market conditions from the previous year with the company’s performance for that same year. Conclude how the market conditions that year influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected.
- Analyze year-over-year performance from the past two years. Consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity in your conclusions.
Cite references to support your assessment according to APA guidelines.
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5
Comparing Apple's Fiscal Year 2021
Financial Performance with Market Conditions
Yvette Garcia
FIN/571
Prof. Tucker
April 17, 2023
A multinational technology firm, Apple Inc. develops, produces, and markets electronic consumer goods, software, and online services. The company has its stock traded publicly, and as such quarterly financial reports are made available. We'll contrast Apple's financial performance for the upcoming fiscal year, 2021, with market conditions from the year before.
Market Condition
In 2020, the COVID-19 virus significantly negatively influenced the global economy and its growth. In response, the US Federal Reserve cut interest rates almost to zero and poured record amounts of money into the economy to regain some stability. Additionally, the Fed started a series of lending initiatives to increase the liquidity of the financial markets.
Financial Reports
In the fiscal year 2021, Apple reported sales of $365.8 billion, a 36% rise over the previous year. The company did exceptionally well thanks to increased sales of the iPhone, iPad, and Mac devices as well as the growth of its services sector. In the fiscal year 2021, Apple's net income increased by 53% to $86 billion from the previous year. The company's net profits increased as a result of the higher sales and gross margin.
Apple's cash and cash equivalents totaled $191.8 billion at the end of its fiscal year 2021. This marked an increase of 6% from the prior year. The company had a large cash reserve, which enabled the company to invest in R&D, make wise acquisitions, and distribute money to shareholders.
Apple paid $2.3 billion in interest during the fiscal year 2021, 35% less than the year before. The corporation profited from lower interest rates since it paid less in interest.
Conclusion
Due to increasing product sales and a growing services sector, Apple's fiscal year 2021 financial performance was strong. The company paid very little interest and had a lot of cash on hand. Throughout Apple's most recent fiscal year, consumer spending and financial markets were supported by low-interest rates and generalized monetary stimulus.
Apple Inc. (2021). Form 10-K for the fiscal year ended September 25, 2021. U.S. Securities and Exchange Commission. https://www.sec.gov/ix?doc=/Archives/edgar/data/320193/000032019321000096/aapl-20210925.htm
Simko, P. J. Apple Inc.: An Application of Financial Analysis, 2003–2018.
Apple Interest rates and Revenues
Interest rates $365.8 billion, 394.3 billion 2021 2022 0.02 2.1999999999999999E-2
Revenues
Interest Rates
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Sheet1
| Apple Inc. – AAPL | |||||
| Apple started paying dividends in August 2012, and increased this annually. Analysts' recommend for the buying of Apple's stock | |||||
| 2019 | 2020 | 2021 | 2022 | 2023 | |
| Cash Flow from Operations. (Billions) | $ 69.30 | $ 81.40 | $ 110.10 | ||
| Price-to-earnings ratio | $ 26.73 | ||||
| Quarterly dividen yield per share | $ 0.22 | ||||
| Dividend yield | $ 0.01 | ||||
| Earnings per ratio | $ 2.97 | $ 3.31 | $ 5.34 | ||
| Revenue in estimates in the next 12 months (Billion) | $ 365.00 | ||||
| Revenue from previous 3 years (Billion) | $ 260.20 | $ 274.50 | $ 347.20 | ||
| Net cash from operating activities (Billion) | $ 69.30 | $ 81.40 | $ 110.10 | ||
| Net cash used in investing activities (Billion) | $ 43.40 | $ 31.20 | $ 73.20 | ||
| Net cash used in financing activities (Billion) | $ 93.20 | $ 67.10 | $ 95.10 | ||
| Average trade volume shares per day (Million) | $ 82.00 | ||||
| Current stock price per share | $ 150.00 | ||||
| 52-week high for Apple per share | $ 157.26 | ||||
| Stock price estimates per share next 12 months (Trillion) | $ 175.00 | ||||
| Market cap | $ 2.50 |
,
Apple Inc.
Yvette Garcia
Prof. Tucker
April 9, 2023
Introduction
In this presentation, my aim is to provide an overview of the financial performance of Apple Inc by examining its cash flow, valuation, and the key performance indicators (KPI) for financial stability.
Apple is an American computer and consumer electronics corporation that is popular for its production of iPhone, iPad, and Macintosh computers (Dong et al., 2020). It is among the largest companies in the world.
Key Performance Indicators
Apple utilizes several performance indicators as part of its comprehensive methodology for long-term efficiency strategy (Podolny et al., 2020).
The major KPIS are:
customer satisfaction
core competencies
Market share
Shareholder value
1. Apple has expanded its focus from technology to include customer satisfaction and ensuring its products complement the consumers lives. 2. Employees understanding the core competencies such as the vision and mission statement to achieve its goals is important. Reinvesting into its employees via professional growth contributes to employee satisfaction and its objective. 3. Gaining market share can attract collaboration in other sectors such as software. 4. Increased shareholder value can contribute to future growth and development.
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The relation between Apple’s stock price and PE ratio
The PE ratio indicates what the public is prepared to pay for a share currently depending on its past or projected income.
While stock price only entails the company’s present value. The stock price and the PE ratios for Apple for the last two years are as follows (Macrotrends, 2023).
| Stok Price | PE | |
| 2023 | 164.64 | 27.96 |
| 2022 | 129.73 | 22.03 |
The relation between Apple’s stock price and PE ratio
From the PE ratio data above, the stock price has increased in the recent past. This is an indication that there is a high demand for Apple stocks as compared to the supply of its stock. On the other hand, the PE has increased since investors are willing to pay a higher share price, currently since there is an expectation of growth in the future. The rising PE ratio further indicates that the stock price is becoming a more expensive revenue and may be overvalued.
Market capitalization
Market capitalization is the aggregate amount of all of a firm's stock shares. Market capitalization quantifies a company's market value as well as the market's perception of its prospects, as this reflects what investors are willing to pay for its stock.
To calculate the company market cap, multiply current market share price by the number of outstanding shares, which includes publicly traded shares as well as restricted shares held by corporate officers and insiders.
The market capitalization of Apple Inc.
Market capitalization is significant because it enables investors to comprehend the real monetary worth of businesses as well as the comparison of one corporate to another. It assists investors in forecasting the potential performance of a firm's stock because it conveys what the market is prepared to pay for the stock as well as its rank in the relative sector.
Apple has a market capitalization of $2.620 trillion as of April 2023 (Macrotrends, 2023). According to data, this makes Apple the most beneficial business worldwide by market capitalization.
Apple is in the IT sector
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Trend on Apple’s stock price, dividend payout ratio, and total stakeholders’ equity
Stock price
Apple’s stock price has been on an uptrend, it has been increasing steadily.
Dividend payout ratio
The highest Dividend Payout Ratio for Apple for the last 13 years was 0.29 and 0.15 was the lowest. The median was 0.25, as well.
Total shareholder’s equity
For the quarter that ended December 31, 2022, Apple's shareholder equity was $56.727 billion, a 21.14% year-over-year decrease (Macrotrends, 2023). Equity held by Apple shareholders in 2022 was $50.672 billion, a 19.68% decrease from 2021. Equity held by Apple shareholders in 2021 was $63.09 billion, down 3.44% from 2020.
Events that have attributed to Apple trends
Stock
One of the few ways a business can affect the price of its stock is by launching a novel, revenue-generating product or service. Sales of Apple's goods have a major role in the company's financial performance, including the rise in its share price. A stock's price rises if there is a greater demand (buyers) than supply (sellers) for it.
Dividend payout
The dividend yield is low because of the rapid rise in Apple's stock price. Thus, not providing much income per dollar invested.
Total stakeholder’s equity
A decreasing net profit margin, a decreasing asset turnover ratio, and rising leverage are the causes of Apple's overall reduction in return on equity.
Overlook of Apple’s performance
The low inventory levels, high days payable outstanding, and low cost of debt all contribute to the company's strong financial position. Apple's ability to manage its finances so well is one of the key reasons why it has been able to deliver consistent profits to its investors over the years.
Apple's impressive financial metrics are a testament to the company's efficiency, strength, and negotiating power. The low inventory levels, high days payable outstanding, and low cost of debt all play a role in the contribution to the company's strong financial position.
The ability to manage its finances, is also a contributing factor as to why Apple has been able to consistently deliver profits to its investors over the years. As such, it is not just the company's products that make it stand out, but also its financial structure and prowess.
This is an indication that Apple is going to meet its financial goals. For these reason, the growth and sustainability of the company are on the right trajectory.
Recommendation
I would recommend investing in Apple’s stock, because the shares are currently trading at a substantially higher price than the average price over the last ten years. This was attributed to the smart move of Apple’s capital being used in buying back it’s stock. Additionlly, during the last decade, Apple has cut its outstanding share count by 40% (Macrotrends, 2023).
Based on some sources, Apple may be facing a shortage of six million iPhone Pro units. Due to a lack of iPhones, some investors anticipate that the company would report lower sales for the year. One common reason for a stock price reduction is concern about lower revenue.
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References
Dong, Y., Skowronski, K., Song, S., Venkataraman, S., & Zou, F. (2020). Supply base innovation and firm financial performance. Journal of Operations Management, 66(7-8), 768-796. https://doi.org/10.1002/joom.1107
Macrotrends (2023). Apple PE ratio 2010-2022. Retrieved from: https://www.macrotrends.net/stocks/charts/AAPL/apple/pe-ratio
Podolny, J. M., & Hansen, M. T. (2020). How Apple is organized for innovation. Harvard Business Review, 98(6), 86-95.
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