Business Finance
Grand Canyon University Apple Company Financial Analysis Case Study Paper

Grand Canyon University

Question Description



Details:

Throughout this course you have been preparing separate components of a comprehensive 2,500-word financial analysis (excluding tables, figures, and addenda) of a chosen company following the nine-step assessment process detailed in Assessing a Company's Future Financial Health.

There are three parts to the final component assignment of the case study.

Part One (Case Study Component 4)

Apply the final three steps of the nine-step assessment process to develop a 750-word analysis of your chosen company:

  1. Viability of the 3-5 Year Plan
  2. Stress Test Under Scenarios of Adversity
  3. Current Financing Plan

Part Two

Access the three prior component assignments, with instructor feedback incorporated, that you submitted in Topics 2, 4, and 6. Integrate these three assignments into the final case study submission along with the Component 4 assignment in this topic to provide a comprehensive analysis inclusive of all nine steps that flows from start to finish.

Part Three

Assume that you will be presenting your analysis to a group of senior management at your place of employment that urgently needs to know this information to make a major financial decision for your company. In 250 words, develop an introduction to your analysis that can serve as an overview. Consider factors that might impede their ability to focus on the information you are presenting. For example, some of your audience may be pressed for time, another may have a crisis in their work team that needs to be attended to quickly, and others may simply not be paying attention. You have one chance to impress them; keep your overview focused, succinct, and informative. Present only key and other potentially relevant points this group needs to know.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to Turnitin. Please refer to the directions in the Student Success Center.

Final Answer

Attached.

Outline
Apple Inc. Financial Analysis
I.
Introduction
II.

Analysis of fundamentals: goals, strategy, market, competitive technology, and
regulatory and operating characteristics.

III.

Analysis of fundamentals: revenue outlook.

IV.

Investments to support the business unit(s) strategy

V.
VI.
VII.
VIII.
IX.
X.

Future profitability and competitive performance.
Future external financing needs.
Access to target sources of external finance.
Viability of the 3-5-year plan.
Stress test under scenarios of adversity.
Current financing plan

XI.

References

XII.

Appendices


FINANCIAL ANALYSIS – APPLE INC

Apple Inc. Financial Analysis
Carmen I. Mendoza
Grand Canyon University

1

FINANCIAL ANALYSIS – APPLE INC

2

Table of Contents
Introduction ............................................................................. Error! Bookmark not defined.
Analysis of fundamentals ......................................................... Error! Bookmark not defined.
Goals……………………………………………………..…………………………….4
Strategy………………………………………………………………………………..E
rror! Bookmark not defined.
Market……………………………………………………………………..………….5
Competitive
technology………………………………………………………………Error!
Bookmark not defined.
Regulatory…………………………………………………………………………....5
Operating characteristics……..………………………………………………………5
Analysis of fundamentals: revenue outlook…………………………………………………..6
Investments to support the business unit(s) strategy(ies). ......................................................... 7
Future profitability and competitive performance. .................................................................... 7
Future external financing needs. ................................................................................................ 8
Access to target sources of external finance. ............................................................................. 8
Viability of the 3-5-year plan ................................................... Error! Bookmark not defined.
Stress test under scenarios of adversity ................................... Error! Bookmark not defined.
Current financing plan ............................................................. Error! Bookmark not defined.
Conclusion…………………………………………………………………………………..15
References …………………………………………………………………………………...16
Appendices………………………………………………………………………………..…17

FINANCIAL ANALYSIS – APPLE INC

3

Introduction
Apple Company is located in Cupertino, California in the United States. It is among
the world’s leading technology firms headquartered in the U.S. The company is popularly
known as the world’s leading brands such as the iPhone, iPad and MacBook. Just like any
leading global company, Apple Inc. needs to have goals in place to realize its long-term
plans. The paper argues that there are certain shortcomings in the business strategy which
needs to be addressed before the strategy can be implemented (Hasan, 2013). For proper
implementation of the plan, the weak points need to be identified and rectified on time. One
of the ways to address this is by identifying the primary customers of the company. The other
thing is to formulate the company core values with a special focus on the interest of the
customers, shareholders and the employees. Then the company needs to come up with the
critical points to be used in measuring the performance especially during the implementation
of the plan (Schneiders, 2010). Then the company has to set the boundaries of the things to
do and those not to do in its operations. To analyze Apple’s financial analysis by analyzing
Apple's Future Financial Health the paper focuses on the nine-step assessment process. In the
financial analysis, the company has come up with an elaborate financing plan. This plan in
one way is helping the customers who cannot afford its product to do although they are
charged some interest. The other way is pure means of financing the plan. In this context, the
paper analyzes the viability of the Apple's Future Financial Health by focusing on the 3-5year plan. In its viability, the paper argues that several factors can be considered to determine
the feasibility of the plan. One of the key factors to consider is whether the plan takes care of
the interest of the customers' and the employees of the company. The paper contends that the
current 3-5 year plan of Apple meets the customers and the employees' satisfaction.

FINANCIAL ANALYSIS – APPLE INC

4

Therefore, if the cash flow continues in the company as projected, then the plan will be very
viable.

Analysis of fundamentals: goals, strategy, market, competitive technology, and
regulatory and operating characteristics
Goals
Apple Inc. is among the world’s leading technology firms headquartered in the U.S.
The company produces some of the world’s leading brands such as the iPhone, iPad and
MacBook. Just like any leading global company, Apple Inc. needs to have goals in place to
realize its long-term plans. The first goal of the company is to create revolutionary products
that meet its diverse clientele needs. This goal is realized annually through the release of
revolutionary products that show the innovative aspect of the company. The other aim of the
company is to give its customers; this goal is realized through constant investment in research
and development in the company.
Strategy
Apple uses the generic strategy of differentiation through which its products are given
distinctive features from those of the competitors. According to Baker (2014), the product
differentiation generic strategy calls for a company to provide its customers with products
that have unique attributes. Apple Inc. products are known to be of high quality, and this
strikes them apart from competitor products. One of the primary reasons Apple pursues this
strategy is because it has highly skilled labor that can help in creating the unique products.
Regarding the growth strategy, Apple Inc. pursues intensive growth strategy through product
development and market penetration as well as market development.

FINANCIAL ANALYSIS – APPLE INC

5

Market
Apple Inc. operates in various product markets that give it a competitive advantage
over its rivals. The first product market consists of the Apple Watch, iPad and iPhone. The
second product market is made up of products such as MacBook, iMAc and Macbook Air.
The company also deals with software products such as iOS, iWork, iLife and macOS.
Additionally, the other product market is the Apple music, TV and iTunes (Apple Inc., 2016).
Competitive Technology
According to Hitt, Ireland and Hoskisson (2009), even before iPods and the iTunes,
Apple has had an important foundation for innovation. Apple has gained its competitive
technology through focusing on innovation while other companies are focused on cost
control. Moreover, the firm does well in producing simply designed products. Therefore the
use of innovative product design, as well as the ease of use of its products, proves to be
apple’s competitive advantage. It simply creates a new concept in the mind of the consumer.
Regulatory
Apple is subject to the laws and regulations globally that affect its domestic as well as
international operations. For instance, the rules and guidelines associated with mobile
communications and media devices in the various authorities in which Apple Inc. operates
are extensive and subject to modification. Those modifications may include, among others,
limitations on the production, distribution as well as manufacturing (Apple Inc., 2016).
Operating characteristics

FINANCIAL ANALYSIS – APPLE INC

6

Apple’s operating characteristic plays a significant role in the financial health of the
firm. Apple Inc. management ensures that all its assets are used accordingly. Moreover, it
investments in the technological improvements, as well as designs, increase their operational
effectiveness. Additionally, the company ensures that it meets all the regulations thus
avoiding fines and possible closure.

Analysis of fundamentals: revenue outlook
Revenue Outlook
As of Jul 26, 2016, Apple Inc. recounted 3rd quarter 2016 earnings of 1.42 per share.
This outcome was in line with the accord of the 38 specialists after the firm and underperformed last year's 3rd quarter results by 23.24% (Financial Times, 2016). Considering this
outlook, Apple Inc. is expected to beat the market by the end of this year (Appendix 8).
With its dominance in the industry, the company sells its products at a premium
pricing. With the premium pricing of the products as well as high demand of the product, the
company is able to emphasize on its growth as well as increasing earnings.
Apple enjoys robust growth rates and strong cash resources. The revenue growth rates
achieved by the company are a play of both increased unit sales and pricing power. While the
unit growth has been derived from the appeal of its products gained in the market place, the
offshoot of successful product lines has resulted in Apple gaining a dominant position, which
has helped it command high pricing power. The combination of these factors enabled Apple
to attain industry leading growth rates. For instance, Apple's revenues grew at a compounded
annual growth rate (CAGR) of 29.4% during FY2010-14. The company's net income grew by
29.6% annually over the same period. Moreover, despite the company's growth approaching

FINANCIAL ANALYSIS – APPLE INC

7

maturity, Apple registered a 7% growth in revenues on year-over-year basis in FY2014.
Furthermore, the company's cash position grew strongly in the recent times. Apple's cash
from operations grew at a CAGR of 8.4% during FY2012-14 to reach $59,713 million by the
end of FY2014.The Company also sits on a cash pile of over $155 billion, which gives it
more financial flexibility. The company's revenue growth and cash position provide a strong
platform for it to invest in growth and expansion. The resource base is critical for remaining
competitive in the technology space which is rapidly and ever changing. The company's cash
base and strong growth history therefore provide competitive advantages.
Apple Inc.'s earnings have increased from $7.42 to an estimated $9.40 over the past 5
quarters, they have shown no acceleration or deceleration in quarterly growth rates when
adjusted for the volatility of earnings

Investments to Support the Business Units Strategies and Plan Viability
With creativity, skills, talents and innovation in the company, the company has been
able to attract more and more consumers. Apple has a substantial pool of engineering talent,
appreciation for design, retailing skills, distribution, and dedication to usability. These skills
will allow the creation and delivery of products that will attract new customers.
The company has low debt as compared to the equity held by the company which
helps in supporting the future investments of the company. With a strong emphasis on
innovation, creativity, and the strategy that the company follows, the company is able to
sustain the competition and has strong plans for the future.

Future profitability and competitive performance.

FINANCIAL ANALYSIS – APPLE INC

8

The revenue accumulation for the enterprise increases annually by an average of 26%
annually while the profit margins continue to expand by 34%. The cash reserves of Apple
Inc. Company began to grow in 2006 the company chose to create the Braeburn Capital so as
to facilitate the management of its assets. To maximize the gross margin the company does
not necessarily produce the products. On the co...

paula9 (10828)
New York University

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