Apple

dept.sfcollege.edu

Apple

Apple inc. has done really well for its self in

the past couple of years. The company is very

profitable and it shows through the increase

in net income and the increase of stock sales.

Apple’s stock is at a very high price now

proving that many investors trust that Apple

can sustain profitability. Apple’s success

could be credited to its iproducts. The

increased popularity of the iPod, iPhone, and

iPad have rocketed sales.

Apple inc. Annual Report


Introduction

Apple’s founder and chief

executive officer is Steve Jobs.

His office is located at 1 Infinite

loop Cupertino, California 95014.

Apple’s ending date of the last

fiscal year was September 25,

2010. Apples primary products

are iPhones, iPods, computers

and computer software. Their

main geographic area of activity

is in the Americas, Europe,

Japan, and Asia.


Audit Report

Apple’s independent auditor is Ernst and young

LLP. They said that the financial statements are

presented fairly in all the material with respect

to the consolidated financial position of Apple.

The results of its operations and cash flows are

in conformity with the generally accepted

accounting principles of the U.S.


Stock Market

Information

The most recent price of the

company’s stock is $372.5

The twelve month trading

range of the company’s stock

is from $281.82 to $422.86

Dividend per share are 0

Date of the above information

October 5, 2011

In my opinion about Apple’s

stock I would have to say sell

because its stock is really high

right now and it will not last

for long especially since the

death of Steve Jobs.


Apples future plan is to develop operating systems that are easy to use, well

integrated, with a well industrialized design. Apple continues to stay ahead of

competition with new innovations and products that capture our interests.

With the introduction of the new iPad many other companies have followed in

their footsteps to try and enter the tablet market. The iPhone another one of

Apples biggest success is one of the best selling smart phones in the U.S. and

apple will continue to produce iPhones that are truly innovative.

http://www.apple.com/ipad/

http://www.apple.com/iphone/#


•Format most like a multistep format.

•Gross profit, income from operations, and net

income all increased but net income stood out

the most because it had a staggering increase of

about 70%.

Gross Profit Income

From

Operations

2009 $17,222 $12,066 $8,235

Net Income

2010 $25,684 $18,540 $14,013


Assets= Liabilities+ Stockholder’

s Equity

2009 $47,501 $15,861 $31,640

2010 $75,183 $27,395 $47,791

•All of Apple’s balance sheet accounts have

increased but assets showed the biggest increase.


•Cash flows from operations have been more than

net income for the past two years.

•The company growing through investing

activities.

•The company’s primary source of financing is

stock sales.

•Overall, has cash increased over the past two

years by almost doubling.


•Revenue Recognition- Net sales is derived primarily

from revenues through the sale of software,

hardware, digital content, peripherals, and service

and support contracts. Apple recognizes revenue in

accordance with industry specific software

accounting guidance.

•Cash- All highly liquid investments with maturities

of there months or less are counted as cash

equivalents.


Accounting Policies

• Short-term investments- Marketable securities with

maturities of less than 12 months are classified as

short- term while marketable securities with maturities

of more than 12 months are classified as long term.

• Inventories- are computed using the first in first out

method. The companies inventories consist of

components and finished goods.

• Property and Equipment- Depreciation is computed by

straight line method over the useful lives of the asset.


Topics of the Notes to Financial

Statements.

1)Summary of Significant Accounting Policies

2)Financial Instruments

3)Fair Value Measurements

4)Consolidated Financial Statements Details

5)Goodwill and other Intangible Assets

6)Income Taxes

7)Shareholder’s Equity and Stock-Based Compensation

8)Commitment and Contingencies

9)Segment information and Geographic Data

10)Selected Quarterly Financial Information (Unaudited)


Financial Analysis

Liquidity Ratios 2009 2010

Working Capitol $14,286 $20,049

Current Ratio 2.7 1.5

Receivables Turnover

Average Day’s Sales

uncollected

16.1 11.07

7.98 11.97

Inventory Turnover 48.2 62.3

Average Day’s Inventory

on Hand

7.62 5.98


Financial Analysis

Liquidity Ratios

Working capital increased because total assets increased.

Current ratio has decreased because current liabilities have

almost doubled in the year.

Receivables turnover has decreased because net sales increased

substantially while accounts receivable only increased by a little

bit.

Average day’s sales uncollected has increased because receivables

turnover had decreased.

Inventory turnover has increased because inventory for 2010 has

increased.

Average day’s inventory on hand has decreased because

inventory turnover has increased showing that Apple is selling

more inventory and is having less inventory on hand.


Financial Analysis

Profitability Ratios

2009 2010

Profit Margin 19.2% 21.5%

Asset Turnover .96 1.1

Return on Assets 25.5% 23.8%

Return on Equity 20.7% 35.3%


Financial Analysis

Profitability Ratios

Profit margin rose in 2010 because sales

increased.

Asset turnover increased because assets

were increased.

Return on assets decrease because net

income increased.

Return on equity has increased because

more stockholders have invested in Apple.


Financial Analysis

Solvency Ratio

For the past two years debt to equity has increased because

liabilities has increased substantially.

2009 2010

Debt to equity 0.50 0.57


Financial Analysis

Market Strength Ratios

Price/earnings per

share

2009 2010

20.08 18.65

Dividends Yield 0 0

Apple stock price/ earnings per share decreased over the

year because the price of the stock rose greatly within

that year. The company did not pay out dividends

because they anticipated that for the foreseeable future

they will retain any earnings and use it for operations

of its business.

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