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Apply: Signature Assignment: Financial Plan

FIN/571

University of Phoenix

Apply: Signature Assignment: Financial Plan

The company that I chose is “Apple Inc., formerly Apple Computer, Inc., is a

multinational corporation that creates consumer electronics, computer software, and commercial

servers. Of course, Apple’s core product lines are the iPad, iPhone, iPod music player, and

Macintosh computer line-up” (History of Apple Inc, 2012). When Apple was created on April 1,

1976. “For more than two decades, Apple Computer was predominantly a manufacturer of

personal computers, including the Apple II, Macintosh, and Power Mac lines, but it faced

uncertain sales and low market share during the 1990s” (History of Apple Inc, 2012). In the year

of 2011 “As of 2011, Apple is currently the largest technology firm in the world with its stock

market value reaching $500 billion in March 2012. Their revenue for the year 2011 was $127.8

billion in sales” (History of Apple Inc, 2012).

Why Funding is Needed

“In 2018, the new US tax law allowed Apple to repatriate hundreds of billions of dollars

that were overseas at a lower tax rate. However, the difference funded Apple's $175 billion

shareholder repurchase program” (Reinicke, 2019). Nevertheless, “Apple plans to use the

money from its latest bond issuance for general corporate purposes, such as share buybacks,

dividend payments, funding, and acquisitions” (Reinicke, 2019). Of course, "The primary reason

for more issuance overall is firms taking advantage of materially lower interest rates (and stable

credit spreads) to opportunistically address funding needs” (Reinicke, 2019).

Sources of Funding

Looking at what Apple has raised a total of $6.2B in funding over 5 rounds. The company

latest funding was raised on Sep 6, 2017 from a Post-IPO Debt round.

Of course, looking at what Apple is taking advantage of low interest rates, rising debt to fund its

growing capital return program. Then, Apple’s total outlay for dividends and share repurchases

has increased from $47 billion in 2015 to $81 billion in 2019. While Apple has tapped into its

cash holdings, which is largely held overseas, it has been taking on debt to a certain extent.

While Apple has been able to borrow at low interest rates, its average interest rates, which we

calculate as interest paid divided by average debt, has trended steadily higher as benchmark rates

have been increasing (Trefis Team,2020).

Associated Risks

Why is Smartphone market trends are slowing down, and they are too dependent on these

sells? During its fiscal year 2017, revenue from iPhone sales made up 61.6% of the company's

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FIN/571 Apply: Signature Assignment: Financial Plan FIN/571 University of Phoenix Apply: Signature Assignment: Financial Plan The company that I chose is “Apple Inc., formerly Apple Computer, Inc., is a multinational corporation that creates consumer electronics, computer software, and commercial servers. Of course, Apple’s core product lines are the iPad, iPhone, iPod music player, and Macintosh computer line-up” (History of Apple Inc, 2012). When Apple was created on April 1, 1976. “For more than two decades, Apple Computer was predominantly a manufacturer of personal computers, including the Apple II, Macintosh, and Power Mac lines, but it faced uncertain sales and low market share during the 1990s” (History of Apple Inc, 2012). In the year of 2011 “As of 2011, Apple is currently the largest technology firm in the world with its stock market value reaching $500 billion in March 2012. Their revenue for the year 2011 was $127.8 billion in sales” (History of Apple Inc, 2012). Why Funding is Needed “In 2018, the new US tax law allowed Apple to repatriate hundreds of billions of dollars that were overseas at a lower tax rate. However, the difference funded Apple's $17 ...
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