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Apple Business Analysis

Essay by   •  March 22, 2012  •  Case Study  •  2,267 Words (10 Pages)  •  2,212 Views

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Business Analysis Part II: Apple

Audrey Tarver

MGT/521

March 19, 2012

Jim Bingel

Business Analysis

The first part of the business analysis began with the decision-making process of a mutual fund manager. After conducting an analysis, which examines the strengths, weaknesses, opportunities, and threats to a company, the mutual fund manager determined that the results of the SWOT analysis, (Strength, Weakness, Opportunity, and Threat) along with other pertinent info, provided enough information to make a determination. The mutual fund manager decided that investing in Apple Incorporated would be a lucrative decision. However, the mutual fund manager needed to conduct further research and obtain competitor data.

The following is the second part of a business analysis of Apple Incorporated conducted by a mutual fund manager. The mutual fund manager is prepared to conduct extensive research in order to make the best decision possible. Strategic financial management is an essential component of a successful business. The mutual fund manager is aware that further research into the financial standing of Apple Inc. is required and begins the task of compiling data. The mutual fund manager must review the company's financial records. Apple Inc.'s balance sheet, cash flow statement, and income statement from year-end 2011 will be reviewed and compared to those of Dell and Microsoft. The financial health of Apple Inc. will be examined, along with technological advances, globalization, and a benchmarking analysis.

Income Statement

A company's income statement outlines the company's profits after costs, expenses, and taxes (Nickels, McHugh, & McHugh, 2010). The income statement is a summary of revenue that has left the company, resulting in net income (Nickels, McHugh, & McHugh, 2010). The income statement is the financial statement that discloses if the company is earning or losing money. The valuable information contained in the income statement is available to a number of entities. Stockholders, lenders, potential investors, employees, and the United States government all have access (Nickels, McHugh, & McHugh, 2010). The mutual fund manager has access to essential information related to Apple Inc.'s profits and expenses and other companies to use for comparison.

Apple Inc.'s income statement shows total revenues in 2011 to be $108,249,000 (Forbes, 2012). There is a significant difference between the 2011 total revenues compared to that of 2008, 2009, and 2010. In 2008, total revenues where, $32,479,000, in 2009, $42,905,000, and in 2010 the total revenues were $65,225,000 (Forbes, 2012). In 2011 Apple Inc.'s total operating income totaled $33,790,000 and net the income was $25,922,000 (Forbes, 2012). Apple Inc.'s year-to-date revenues for 2011 were $108,249,000, and the year-to-date income from total operations was $25,922,000 (Forbes, 2012). The facts and figures reviewed in Apple Inc.'s income statement were pleasing to the mutual fund manager.

Dell's income statement for 2011 shows total revenues at $61,494,000 and operating income at $3,433.000 (Forbes, 2012). Dell's net income from continuing operations was $2,635,000; net income from total operations $2,635,000, and total net income of $2,635,000 (Forbes, 2012). The year-to-date income statement for 2011 showed Dell's revenues at $61,494,000 and year-to-date from total operations at $2,635,000 (Forbes, 2012).

Microsoft's income statement for 2011 shows total revenues at $69,943,000 and operating income at $27,161,000 (Forbes, 2012). The net income from Microsoft's continuing operations was $23,150,000; net income from total operations $23,150,000, and a total net income of $23,150,000 (Forbes, 2012). The year-to-date income statement for 2011 showed Microsoft's revenues at $69,943,000 and year-to-date from total operations at $23,150,000 (Forbes, 2012). The mutual fund manager decides to continue researching and comparing the financial data for each company. Next balance sheets for each company are reviewed and compared.

Balance Sheet

A balance sheet is a fiscal statement that reports a company's financial circumstances at a specific time (Nickels, McHugh, & McHugh, 2010). A correct balance sheet will result in both the credit and debit sides of the sheet balancing. According to the asset section of the balance sheet, Apple Inc.'s total current assets in 2011 were $44,988,000 and total assets were $116,371,000 (Forbes, 2012). The liabilities and stockholder equity section of the balance sheet revealed total liabilities of $39,756,000, total equity $76,615,000, and total liabilities and equity combined equaled $116,371,000 (Forbes, 2012).

Dell's 2011 balance sheet shows total current assets of $29,021,000, total assets of $38,599,000, total equity of $7,766,000, and total liabilities and stock equity at $38,599,000 (Forbes, 2012). Additionally, Microsoft's balance sheet from 2011 shows total current assets of $78,918,000 and total liabilities of $51,621,000 (Forbes, 2012). Microsoft's 2011 total equity was $57,083,000 and total liabilities and stock equity was $108,704,000 (Forbes, 2012). The information obtained from the balance sheets proves useful to the mutual fund manager; however, there is a need to conduct further review. The mutual fund manager will ensure that all financial data is reviewed and compared.

Statement of Cash Flows

A statement of cash flows report cash receipts and expenditures related to a company's operations, investments, and financing (Nickels, McHugh, & McHugh, 2010). Apple Inc.'s cash flow information for 2011operating, investing, and financing activities. The net cash from operating activities was $37,529,000 (Forbes, 2012). The net cash from investing activities was $40,419,000, and the net cash from financing activities was $1,444,000 (Forbes, 2012).

Dell's 2011 statement of cash flow reported net cash from operating activities at $3,969,000, net cash from investing activities at $(1,165,000), and net cash from financing activities at $477,000 (Forbes, 2012). Microsoft's 2011 cash flow statement reported $26,994,000 in net cash from operating activities; net cash from investing activities $(14,616,000), and net cash from financing activities at $(8,376,000) (Forbes, 2012). The mutual fund manager found the cash flow

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