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Apple Inc. Financial Performance Term Paper

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Updated: Jul 21st, 2021

Introduction

Apple. Inc. is a leader in the technological market and owns patents for iPhone, iPad, and iMac (Miller, 2014). It has its own soft operation system (iOS) and caters to the needs of the customers by offering unique design and performance excellence (Apple, Inc., 2015). It could be said that the main goal of this paper is to evaluate the financial performance of the company, and all values are in millions.

Revenue and Net Income

Speaking of Income Statement, net sales were $182,795 (2014) and $233,715 (2015), and cost of goods sold (COGS) was $112,550 (2014) and $142,260 (2015) (Apple, Inc., 2015; MarketWatch, 2017). Meanwhile, gross profit was $70,245 (2014) and $91,455 (2015). The company used the effective tax rate of 26.4% in 2015, and it “differs from the statutory federal income rate of 35%” (Apple, Inc., 2015, p. 29). This adjustment was necessary due to globalization.

Accumulated Other Comprehensive Net Income had a value of $1,082 (2014) and $(345) (2015) (Apple, Inc., 2015). It experienced loss, and it implied that the company attempted to balance its financials by focusing on improving operations and considering changes in currency exchange. Consequently, Apple’s statement included “foreign currency translation” and “net of tax effects” (Apple, Inc., 2015, p. 40). As for the bottom line item, Apple displayed a total comprehensive income of $51,967 (2015) (Apple, Inc., 2015).

When referring to Balance Sheet, total current liabilities were $80,610 (2015) and $63,448 (2014), total current assets were $89,378 (2015) and $68,531 (2014), and total assets were $290,479 (2015) and $231,839 (2014) (Apple, Inc., 2015). Total stockholder’s equity was $119,355 (2015) and $111,547 (2014) (Apple, Inc., 2015). These valuable findings were presented in the Balance Sheet and indicated that the enterprise experienced growth in its value, but the liabilities increased due to investment and expansion.

Another matter that could be calculated from the Balance Sheet was working capital, and its values were $8,768 (2015) and $5,083 (2014). Apart from an increase in total current liabilities, available working capital experienced growth of $3,685 from 2014. This matter implied that the company was able to allocate its financial resources effectively and could be considered as profitable and healthy. As for treasury stock, it also increased in value, as its adjusted cost was $34,902 (2015) and $23,140 (2014) (Apple, Inc., 2015). As for other comprehensive net income, its value was $(137) (2014) and $(411) (2015). Meanwhile, retained earnings were $87,152 (2014) and $92,284 (2015) (Apple, Inc., 2015). Retained earnings experienced an increase while other comprehensive net income became even more negative.

To understand the company’s profitability, different types of financial ratios were used. For example, the value of Gross Profit Margin was 38% (2014) and 39% (2015), while Net Profit Margin was related to 22% (2014) and 23% (2015). Both of these values signified an increase in profits by at least one percent. Based on these findings, sales were rising in profitability. For example, gross profit and net income grew by $21,210 and $13,884, respectively, from 2014 to 2015.

Operating Activities

When accessing cash flow activities, net income was 39,510 (2014) and $53,394 (2015) versus the total for operating activities of $59,713 (2014) and $81,266 (2015). As for the items of significance between net income and the total for operating activities, they were related to cash generated from income taxes and interest rates, as they were presented as a supplemental disclosure and had no impact on cash flows. The enterprise provided cash from operations while taking advantage of its core business activities and other cash-generating procedures.

Investing and Financing Activities

Speaking of assets, it was necessary to refer to the Balance Sheet and marketable securities ($33,903), property ($2,117), Goodwill ($500), a takeover of intangible assets ($249), and other assets ($1,792) were purchased since 2014. Meanwhile, this increase in their values was rational, as property ($10,050) and Goodwill ($3,040) also experienced growth since 2013 (MarketWatch, 2017). In this instance, the company highly focused on expansion and attempted to invest in diverse activities by 2014. In turn, the financing activities included insurance of common stocks, tax benefits from equity awards, and insurance from term debt (Apple, Inc., 2015). In this case, a majority of cash inflows were acquired from stockholders’ equity.

Analysis

Based on the findings presented above, Apple, Inc. had well-balanced cash inflows and outflows while the total for operating activities also experienced an increase of $21,553 from 2014 to 2015. Apart from negative values of cash from financing and investing activities, the company’s overall cash balance was positive ($21,120 in 2015) and greater than in the previous year ($13,844 in 2014). It was generated from changes in stockholders’ equity and operations, and it implied that the business had favorable financial conditions for its development.

Conclusion

Overall, Apple’s performance was associated with profitability. Its revenues continued to grow, and Gross Profit and Net Profit Margin increased by one percent annually. It could be said that the company has to take advantage of these activities, as they help maintain market shares and have outstanding financial performance.

References

Apple, Inc. (2015). Web.

MarketWatch. (2017).Web.

Miller, R. (2014). Business law today: Text and cases: Diverse, ethical, online, and global environment. Stamford, CT: Cengage Learning.

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IvyPanda. 2021. "Apple Inc. Financial Performance." July 21, 2021. https://ivypanda.com/essays/apple-inc-financial-performance/.

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IvyPanda. (2021) 'Apple Inc. Financial Performance'. 21 July.

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