EXAMINATION OF FINANCIAL STATEMENTS Examination off Financial Statements: Apple, Inc. Name of Student Name of Professor Name of Course Date EXAMINATION OF FINANCIAL STATEMENTS Introduction Apple, Inc. is an American technology company engaged in developing, designing and selling computer software, hardware, iPad tablet computer, iPhone, iPad, etc. The company was founded by Steve Jobs, Steve Wozniak and Ronald Wayne on April 1, 1976 and is headquartered at Apple Campus, Cupertino, California, US. Examination of Financial Statements The net income of the company for current fiscal year ended 26 September, 2015 was $53.394 billion. The income significantly increased during the year in comparison of net income of $39.510 billion during the year 2014. The net income increased by $13.884 billion or 35.14% during 2015. It shows a growth of the company during the fiscal year 2015. The change in income is good indication for investors as the net income has considerably increased. As a result of it Return on Investment (ROI) of the company has increased. It will attract the investors to invest in the company in expectation high returns and high dividend payout. The demand of stock will increase which will lead to increase in the market price of the stock as a result of it there will be an increase in wealth of investors. The ending amount of stockholder’s equity was $119.355 billion for the year 2014 as compared to $111.547 billion for the year 2014. It increased by $7.8 billion or 7.00% during current fiscal. The organizations such as labor unions are interested in stockholder’s equity because the members of unions are also shareholders in the company through their pension plans. An increase in stockholder’s equity is an indication that the value of the pension fund of members of labor unions is also increasing. The total value of assets of Apple, Inc. stood at $290.479 billion for the fiscal year ended 26 September, 2015. Its relevance for the potential creditors is that they will be able to assess the EXAMINATION OF FINANCIAL STATEMENTS soundness of the company and will not hesitate in offering credit to the company. The vendors who supply various commodities, spares or consumables to the companies on credit basis are also creditors of the companies in firm of accounts payable. It is important for them to look assets to assure that due to any event if the company is not able to pay its debts then they can get their money back legally by realizing assets of the company. Total cash flow from the operations is $81.266 billion. There are a number of users of financial statements. Final statements are intended for the purpose of gaining reasonable knowledge of the economic activity and financial position of business firm. They are used by different categories of people for different purposes. The users can be classified into two: internal users and external users. The most important users of financial statements are managers of the corporation who formulate plans and take business decisions based on these plans. The other important users are the institutional investors who use the statements to determine the financial position of the company and make logical investment decisions based on their analysis. My role in the company is Vice President – Finance. In my current role the use of financial statements is very important in determining the overall financial health of the company as well as forecasting the future financial requirements. It is completed by using various financial tools, such as, ratio analysis, common-size analysis, etc. The ratio analysis is performed on regular basis to determine the profitability, solvency and liquidity position of the company. The profitability analysis tells about the gross profit generated on the sale of inventory. The return to sales shows profit earned by the company after deducting all the operating expenses. Net profit shows the net income of the company after deducting all the expenses such as interest and tax. Solvency ratios show and compare the position of company with respect to what it owns and EXAMINATION OF FINANCIAL STATEMENTS what are its liabilities. They compare the debts of the company with relation to its equity and assets. Liquidity ratios assist in finding out the ability of the company to pay its short-term obligations from its current assets. By using common size analysis all the expenses incurred are calculated in relation to revenue. It helps in making comparison of expenditure incurred with prior years. The common size analysis of balance sheet enables to determine all the assets and liabilities of the company as a percentage of total assets. It enables to track the deficiencies and to take corrective decision. The other major use of financial statements is in determining the future needs of finance. If it is predicted that the company may run shore of cash in coming future then the arrangements and provisions for it are made well in advance. EXAMINATION OF FINANCIAL STATEMENTS References Form 10-K (2015) Apple, Inc. Retrieved from: http://investor.apple.com/sec.cfm?view=all http://www.thefiscaltimes.com/Articles/2012/11/28/7-Massive-Challenges-Facing-the-NewSEC-Chief EXAMINATION OF FINANCIAL STATEMENTS
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