Swot Analysis of Apple

SWOT Analysis of Apple

Abstract

The purpose is to describe strengths, weaknesses, opportunities and threats to Apple Company. For this purpose the financial statement for the year ended 2010 and 2009 have been used. Various techniques such as ratio, vertical and horizontal analysis have been used, to determine the SWOT for the company. It has been also discussed that how this analysis may help in determining the interest of stakeholders both internal and external. Finally it has been discussed that how the company can meet the requirements of these stakeholders.

Introduction

The company has been selected is Apple, symbol is AAPL and listed in New York Stock Exchange. It is an American multinational company. It was founded in 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. It designs and market consumer electronics, computer software and personal computers

Analysis of Financial Statements

Ratio Analysis Sep-10 Sept 09

Current Ratio 2.01 2.74 times

Quick Ratio 1.79 2.58 times

Net profit Margin 21.48% 19.19%

Return on Assets 18.64% 17.34%

Account Receivable Turnover 5.64 6.93 times

Inventory turnover 37.62 56.45 times

Total assets turnover 0.87 0.90 items

Interest times earned ratio N/A N/A times

Debt to Equity ratio 0.57 0.50 times

Debt to total assets ratio 36.43% 33.39%

The current and quick ratios of the company in the year 2010 have gone down as compared to the previous year. It has declined by .73 and .69 times respectively. The net profit margin has increase by around 2% in the year 2010 as compared to 2009. The high net profit margin has improved the return on assets by around 1.30%, despite a slight decline in total assets turnover by .03 times in the year 2010 as compared to 2009. The account receivable turnover has declined by 1.3 times but the changes in inventor4y turnover is very significant by around 20 times which shows that inventory is piling up or company is holding more inventory than its sales. Company is not paying any interest on this debt, whatever the liabilities are with no interest. The company debt burden has increased in the year 2010 as compared to 2009 which is evident from increase in debt to equity ratio by .07 times and debt to total assets ratio by around 3%.

Common Size Analysis of Balance Sheet

All figures in millions in $ Sept 09 % Sept 09 %

Cash and Cash equivalent 11261 14.98% 5263 11.08%

Short Term Investments 14,359 19.10% 18,201 38.32%

Net Receivables 11,560 15.38% 6,192 13.04%

Inventory 1,051 1.40% 455 0.96%

Other Current Assets 3,447 4.58% 1,444 3.04%

Total Current Assets 41,678 55.44% 31,555 66.43%

Long Term Investments 25,391 33.77% 10,528 22.16%

Property Plant and Equipment 4,768 6.34% 2,954 6.22%

Goodwill 741 0.99% 206 0.43%

Intangible Assets 342 0.45% 247 0.52%

Other Assets 2,263 3.01% 2,011 4.23%

Total Assets 75,183 100% 47,501 100.00%

Liabilities

Current Liabilities

Accounts Payable 17,738 23.59% 9,453 19.90%

Other Current Liabilities 2,984 3.97% 2,053 4.32%

Total Current Liabilities 20,722 27.56% 11,506 24.22%

Other Liabilities 5,531 7.36% 3,502 7.37%

Deferred Long Term Liability Charges 1,139 1.51% 853 1.80%

Total Liabilities 27,392 36.43% 15,861 33.39%

Stockholders' Equity

Common Stock 10,668 14.19% 8,210 17.28%

Retained Earnings 37,169 49.44% 23,353 49.16%

Other (46) -0.06% 77 0.16%

Total Stockholder Equity 47,791 63.57% 31,640 66.61%

Total liabilities and Capital 75,183 100.00% 47,501 100.00%

Total current assets are around 55% in the year 2010 as compared to 66% of 2009. It was mainly due to decline in short term investment, which was 38% of total assets in 2009 while it went down to around 19% in year 2010. It may be due to shifting of short term investment to long term investment which is evident from 22% of total assets in 2009 while in 2010 it is around 34% of total assets. The assets were more financed form debt instead of equity in the year 2010. The increase in liabilities was around 3% more in the year

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