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Apple Inc.

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Prepared By: Somori Coleman

Prepared For: Dr. Holloman

Financial Reporting & Analysis: ACG 3102

School of Business & Industry

December 3, 2015

Fall 2015

Research Objective

The primary objective of research conducted for Apple Inc. is to assess the financial execution of the company in its entirety. By interpreting Apples financial statements and evaluating performance barriers this will allow one to entail how the company, Apple, functions in its day to day processes and continues to break records with its thriving success. Also in this report with be an analysis conducted comparing Apple to one of its leading competitors Google. The data analyzed for each company will solely be based upon measurements of various accounts. Furthermore, within my findings, I will demonstrate the company’s overall financial state, thus leading me to conclusions that will illustrate what the data currently states in addition to the information the data infers.

In the final analysis, my expectations are to develop fundamental skills that can be used to further my knowledge in company assessments involving different types. Analyzing the necessary data needed to form my conclusion with help my finance background and with learning this I will have a better idea of how analyst value companies and securities as a whole.

Executive Summary

        Apple Inc. is one of the nation’s largest retailers when it comes to cellular devices and electronics. Apple Inc. is an American multinational technology company headquartered in Cupertino, California: that designs, develops, and sells consumer electronics, computer software and online services. Founded on April 1, 1976 by friends, Steve Jobs, Steve Wozniak and Ronald Wayne the intention was to develop and sell personal computers. Originally it was named Apple Computer Inc. but on January 3, 1977 it was renamed Apple Inc. The stock ticker symbol can be found by using abbreviation AAPL as per NASDAQ exchange information; in addition, Apple is trade on the NASDAQ Global Select Market, under the exchange-traded fund (ETF). Apple joined the Dow Jones Industrial Average on March 19, 2015; this fiscal year has proven to be Apples best yet, the fourth quarter, which ended on September 26, 2015 the company had quarterly revenue of $51.5 billion and quarterly net profit of $11.1 billion; revenue grew 28% to $234 billion. Coinciding with financial statements the 10-k was filed on September 26, 2015. Currently, and since 2009, Apple has been audited by independent accountants Ernst & Young LLP which are also responsible for auditing companies such as Google. Apple has a large range of products and services which include developing their own software and programming for their devices, services such as: iCloud, app store, genius bar to list a few. Apple continues to thrive in the electronics market with new innovations are added to the product lineup yearly it remains hard for others to compete. Products that Apple currently produces a are its bestselling iPhone, iPad, iMac, iPod for music lovers and the latest addition the apple watch.

        Google Inc. is an American multinational technology company specializing in internet- related services and products according to its company overview. These services and products include online advertising technologies, search cloud, computing and software. Google was founded on September 4, 1988 in Mountain View, California by Larry Paige and Sergery Brin. The main competitors for Google include Apple, Nokia, Samsung, and Microsoft to name a few. The stock symbol for Google is GOOG according to the NASDAQ stock exchange. Google’s 10k form was filed on September 30, 2015, which was the third quarterly report for the fiscal year; upon reviewing the books for and looking over the audit trail Google and Apple share in common independent auditors Ernst & Young who keeps tracks of the company’s records. The primary services for Google is for being the number one search engine online, also developing software that is used on electronic devices. In addition, products that Google offers for sale are Android cellphone devices, for example Nexus one. Also, Google offers a tablet called Pixel C which is a portable version of their laptop the Chromebook.

Horizontal Analysis

        Additionally, horizontal analysis is one of the best ways affirm can measure year-to-year company accounts; it gives a visual on which accounts are expanding, remaining neutral, or are simply declining. Within aspects of horizontal analysis various accounts are analyzed including: revenue, gross profit, net income, income from continuing operations, net cash from operating activities, and assets. Data used to compare Apple and Google were from the 2014 2015 operating cycle.

During the 2014-year Apple reported fourth quarter revenue earnings reflective to the date September 27, 2014 as $42.1 billion with a gross profit of $70,537,000 versus the 2015 year where revenue earnings equaled $51.5 billion and gross profit was $93,626,000. Net income was reported as $39,510,000 which is $13,884,000 million dollars less than that of 2015. Income from continued operations during 2014 was congruent to net income which was reported as $39,510,000 which also was the same findings of 2015 which was the same as the previous year. In addition, net cash from operating activities based on the 2014 year was $59.71 billion which in the following year increased by $2.92 billion. Furthermore, total current assets are $231,839,000 for 2014 while in 2015 it had a significant increase to $290,479,000.

        Similarly, Google’s earnings for the full year of 2014 are as follow; revenue totaled $45,085 million although it hasn’t released its 2015 fourth quarter statement as of the third quarter Google has earned $53,660 million which is already more than the previous year and they still have one quarter left to report. Gross profit for 2014 was $40,668 million versus $32,521 million in 2015. Correspondingly, net income during the 2014 year concluded at $14,444 million, but in 2015 once again based on three quarters is $11,425 billion which will exceed 2014 by the end of the period. In 2015, income from continued operations is the same as that of net income ($11.425 billion), but in 2014 continue operations was $451 million lower than the current year which is great because it shows growth. Also net cash from operating activities based on 2014 reports summed at $49,505 million while 2015 proved to be another win for Google by increasing by $6,700 million before the final close. According to Googles 2014 balance sheets assets accumulated $130,426 million in income contra to 2015 $144,281 million that’s $13,855 million more than the previous year.



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