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Factors contributing to Apple's success
Factors contributing to Apple's success
Factors contributing to Apple's success
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Inventories have very little influence as to whether Apple Inc. has the ability to be responsible for current liabilities using their current assets. This fact is a representation that Apple does not rely heavily on inventories to account for assets. This means that Apple has other current, or short-term assets like, cash and cash equivalents, short-term marketable securities, and accounts receivable among other assets, that if needed, could cover the company’s current liabilities. Apple maintains levels of inventory that keep up with consumer demand rather than sitting on inventory that could potentially not move (Apple Inc. Form 10-K. 2014.). Apple also maintains quick ratios that exceed median industry levels and are closer …show more content…
This ratio is used to calculate how many times in a period a company is turning over inventory. As long as a company is not running out of stock of inventory thereby missing out on selling opportunities, the higher the inventory turnover ratio is, the more effectively a company is managing their inventory (Ross 61). In 2010, Apple Inc.’s inventory turnover ratio was 37.62 times, in 2011 the ratio was 83.03 times, in 2012 the ratio was 111.06, in 2013 the ratio was 60.43, and in 2014, the most recent year recorded, Apple’s inventory turnover ratio was 53.18 times (Apple Inc. Form 10-K. 2014.). Figure 9 below is a graph depicting Apple’s inventory turnover ratio for the past 5 …show more content…
Earnings per share is calculated by dividing net income by the number of total shares outstanding (Ross 26). Apple Inc.’s 10-K lists earnings per share in two categories, basic a diluted. Basic earnings per share are calculated by dividing available income to common shareholders by the weighted-average number of outstanding common stock during the period. Diluted earnings per share are calculated by dividing available income to common shareholders by the weighted-average number of outstanding common stock during a period of time but it is increased to include additional shares of common stock that would have been outstanding if the potentially dilutive securities were not issued. In 2012 Apple reported basic earnings per share (EPS) of $6.38 and diluted EPS of $6.31. In 2013 the company reported basic EPS of $5.72 and diluted EPS of $5.68, and in 2014 the company reported basic EPS of $6.49 and diluted EPS of $6.45 (Apple Inc. Form 10-K.
Apple Computer Inc designs, manufactures, and markets personal computers and related personal computing and communication solutions. The return of Steve Jobs, the companies founder, as CEO has pulled the company’s stock price up 775-percent through his launch of innovative products such as the iMac computer line. On January 5, 2000, Jobs announced that he was dropping interim from his CEO title and taking the job full-time. With this news and Apple’s new products such as the iBook, a portable pc and Quick TV, an internet television access feature, Apple Computer is headed for success and is sure to increase their share in the computer market.
The improvement in the current ratio during the period demonstrates an increase in the company’s ability to meet its current obligations. The ratio of 1.4, up from 1.2, means that Walgreen can cover its short term obligation by 140%. The quick ratio indicates the company’s ability to cover its current obligations from cash, cash equivalents, and accounts receivable. It is a good indication of the reliance of the business on its conversion of inventory to pay current obligations. In the case of Walgreen, the ratio improved from 0.4 to 0.7. However, this is still less than 1 time, meaning that it only has 70% of its current obligations covered by assets that are easily converted to cash. Thus, indicating a heavy reliance on
It is another indicator of liquidity which is determined by subtracting inventory from the current assets and dividing by current liabilities. Inventories are less liquid asset, so it is eliminated in determining this ratio. This ratio is already very less and every quarter it is decreasing which indicates about the poor financial health of the company. But in case of Chevron this ratio is far ahead and fluctuates between 1.35 to 1.46, whereas Exxon values are fluctuating within the range of 0.79 and 0.61. Chevron liquidity positi...
Analyzing Wal-Mart's annual report provides a positive outlook on Wal-Mart's financial health. Given the specific ratios and its comparison to other companies in the same industry, Wal-Mart is leading and more than likely continue its dominance. Though Wal-Mart did not lead in all numbers, its leadership and strong presence of the market cements the ongoing success. The review of the current ratio, quick ratio, inventory turnover ratio, debt ratio, net profit margin ratio, ROI, ROE, and P/E ratio all indicate an upbeat future for the company. The current ratio, which is defined as current assets divided by current liabilities, is a measure of how much liabilities a company has compared to its assets. Wal-Mart in the year of 2007 had a current ratio of .90, and as of January 2008 it had a current ratio of .81. The quick ratio, which is defined as current assets minus inventory divided by current liabilities, is a measure of a company's ability pay short term obligations. Wal-Mart in the year of 2007 had a quick ratio of .25, and as of January 2008 it had a ratio of .21. Both the current ratio and quick ratio are a measure of liquidity. Wal-Mart is not as liquid as its competitors such as Costco or Family Dollar Stores Inc. I believe the reason why Wal-Mart is not too liquid is because they are heavily investing their profits for expansion and growth. Management claims in their financial report that holding their liquid reserves in other currencies have helped Wal-Mart hedge against inflationary pressures of the US dollar. The next ratio to look at is the inventory ratio which is defined as the cost of sales divided by average inventory. In the year of 2007, Wal-Mart’s inventory ratio was 7.68, and as of January 2008 it was 7.96. Wal-Mart has a lot of sales therefore it doesn’t have too much a problem of holding too much inventory. Its competitors have similar ratios though they don’t have as much sales as Wal-Mart. Wal-Mart’s ability to sell at lower prices for same quality, gives them the edge against its competition. As of the year 2007, Wal-Mart had a debt ratio of .58, and as of January 2008, it had a debt ratio of .59. The debt ratio is calculated by dividing the total debt by its total assets. Wal-Mart has a lot more assets than it does debt so Wal-Mart is not overleveraged.
In 2012 Macy’s had a gross profit margin and net income margin of 11148, and 1335 respectively. In 2013 Macy’s had a gross profit margin and net income margin of 11206, and 1486 respectively. In 2014 Macy’s had a gross profit margin and net income margin of 11242, and 1526 respectively ("Annual Reports/Fact Book -Macy 's Inc."). Gross profit and net income margin both show steady increases year over year, this data indicates Macy 's is continuing to grow at a sustainable rate. In 2013, Macy’s inventory turnover was 3.15, and decreased to 3.03 in 2014. Number of days sales in inventory in 2013 was 115.84 and 120.28 in 2014 ("Annual Reports/Fact Book -Macy 's Inc."). With the decrease in inventory turnover and conversely an increase in number of days sales in inventory Macy 's is showing a decrease in managing inventory, in other words this excess inventory is decreasing
The company went public in 1980 by offering 4.6 million shares at $22/per share. The shares sold out almost immediately and generated more capital than any IPO since Ford Motor Company in 1956. Apple is considered the world’s largest information technology company by revenue. In February of 2015, Apple was the first U.S. corporation to be valued at over $700 billion. During the years of 1985-1996, Apple suffered with low revenue and also low share interest. After Steve Jobs came back on the job as CEO, Apple jumped back by introducing key Apple products which in the long run made Apple what it used to be, the number one company to sell new and improved technology. Apple’s stock has had four different stock splits, but the stock has gone up close to 30,000%! It is definitely a stock that is volatile to the global news and market but in the long run it is also a stock that is good for the portfolio because of its
The Dupont analysis includes the asset turnover ratio, the profit margin percantage, return on shareholder’s equity percentage, return on assets, and the equity multiplier (Spiceland, Sepe, and Nelson 258-264). The asset turnover ratio is the amount of revenue received for every one dollar of assets, it reveals how efficiently the company is distributing assets. Apple’s asset turnover ratio is 60.43 which means for every one dollar Apple has in assets, they receive approximately sixty cents (Apple Inc). Microsoft’s asset turnover ratio is 13.17 so for every dollar they only receive about thirteen cents (Microsoft Inc). Apple is doing significantly better in this category. The profit margin is just how much of a company’s sales they keep as a profit. Apple’s profit margin is 21.67% while Microsoft has a 28% profit margin so Microsoft is accumulating more profit off each sale but their sales are lower. The return on shar...
It is evident that people have different and unique desires when it comes to career interests. Therefore, this desire is the driving motive for people in their career growth and development. Perhaps, the first step towards selecting a satisfying career is to find out the things that are exciting and a source of joy. I have always found business management an interesting career option because my ultimate objective is to become among the leading businesspersons. Business management involves dealing with various kinds of people and a lot of strategic decision-making, which are the two major important attributes of a business person (O'Grady, 2009). Business management career is an interesting career, because it is one of the ways that an individual can become their own boss through establishing a business and seeing it through to success. In this particular research, my focus was based on Apple Inc (Hitt, Hoskisson & Ireland, 2013). It is one of the leading companies in the mobile phones and computer industry. Its success is accredited to the manner in which management has been handled within the company.
Rondo's Inventory Ratio declined to 9.5 in 2005, down from a ratio of 10 in 2003 and 2004. Rondo's sales improved year-over-year and the decline in inventory turns may be the result of carrying more inventory in response to increased sales. However, Rondo is still carrying too much inventory or the company may have excess obsolete inventory. Rondo needs to utilize just-in-time methods to improve inventory turn over. (Nice catch.) Carrying fewer inventories is required to improve efficiency and reduce cost. Rondo's performance is poor in this area.
The inventory turnover decreased from 3.8 to 3.59. This is explained by the higher increase in the average inventory (37%) than the increase in cost of sales (29%) during 2005. This means that the rate at which inventory is sold is dropping
Inventory Turnover (2011 only): For the year 2011, the inventory turnover was calculated by the cost of good sold divided by the typical average amount of inventory. The average inventory was equal to the current inventory plus the prior inventory all divided then by two. Resulting in the 2011 Inventory Turnover to be equal to 3.480 because 5,385,088 / 1,547,223.5=
Upon examining P&G’s financial ability to meet short-term obligations, it is apparent that not only have their current liabilities exceeded current assets over the last three years, but close to half of their current assets have been tied up in inventories and other illiquid assets. For example, assessing both the quick and current ratio respectively shows that less than 70% of the firm’s current assets could be converted immediately to pay current commitments, but a little more than 90% of the firm’s liabilities would ultimately be covered. Though, based on industry average similar findings occur; therefore, it must not be uncommon for industries similar to P&G to
Apple Inc.’s Financial Analysis case study will cover the nine-step assessment process to evaluate the company’s future financial health. The nine-step evaluation process will entail the following: 1) Fundamental analysis covers objectives, plan of action, market, competing technology, and governing and operational traits, 2) Fundamental analysis-revenue direction, 3) Investments to support the firm’s entities action plan, 4) Forthcoming profit and competitive accomplishment, 5) Forthcoming external financial requirements, 6) Accessibility to direct at sources of external finance, 7) Sustainability of the 3-5 year plan, 8) Strain examination beneath scenarios of calamity, and 9) Present financial plan (State University, 2013). The fundamental analysis will be explained primarily in the next section.
Choosing two profitable stocks amongst a myriad of potential alternatives is a daunting task to say the least. In order to narrow my choices from thousands to two, I examined several aspects of companies I was interested in. Among these were, company overview, alpha and beta ratings, price ratios, price charts, and company headlines. After evaluating this information, I chose Intuit INC (INTU) listed on the NASDAQ and Johnson and Johnson (JNJ) listed on the NYSE.
Inventory can be explained as any assets that are held for future use or sale. Inventories are held for a variety of reasons, such as customer demand for end items, smoothing production, a hedge against stock outs and price increases, and economical purchasing. It is very costly and wasteful to keep large inventory on hand. The new technology and application quantitative tools and techniques for inventory management have permitted decrease in inventory. Top management needs to understand the role that inventories have on a company’s financial performance, operational efficiency, and customer satisfaction and strike the proper balance in meeting strategic objectives. They are responsible in keeping sufficient inventories to meet demand of the customers by sustaining the lower cost as possible. Inventories are required for a business to operate efficiently and effectively. Inventory management is a very significant part of basic operations activities. Most businesses and general organizations obtain most of their revenue through the sale of inventory.