Apple Inc Essay

6243 WordsJan 15, 201225 Pages
Apple, Inc. An Analysis of Financial Health and Future Economic Prospects Submitted By: Joe Cappetta Arleen Flowers Shoney Jackson Jarian Newman Richard Schultz Professor Robert G. Bristow BUS5440 Financial Management Table of Contents Executive Summary 4 Company Introduction 4 Financial Analysis 5 Weighted Average Cost of Capital (WACC) 7 Future Cash Flows 9 Historical Stock Price 13 Security Analysts Reports 15 Dividend and Capital Structure 17 Corporate Governance 20 Merger and International Strategy 20 Appendix 24 References 26 Executive Summary Apple Inc. is a multi-billion dollar company and a leader of the technology industry and computer sector. Despite very tough competition from powerhouse companies such as Hewlett Packard, Dell and IBM, Apple is still ahead of the technology race and brings in stellar returns and capital. Its innovative products such as the iPhone, iPad and its newest product, the iCloud have made Apple very popular and successful in the stock market. With a cost of common stock of 12.1102% which also equates to its WACC, Apple is optimizing its capital by avoiding long -term debt and preferred stock, which would jeopardize its market strength. With a beta of 1.14, Apple’s common stock has a little more than average risk and its return moves in the direction of the market. If Apple chooses to increase its rate of return, it may do so with no resistance, due to a favorable WACC. Company Introduction Company History Apple Company was established in April 1976 by founders Steve Jobs, Steve Wozniak and Ronald Wayne, when they introduced the Apple I PC kit. The company incorporated in 1977 in the state of California, and now trades on the NASDAQ as Apple Inc. (AAPL), where it has over 917M outstanding shares of common stock valued at $208B+. Figure 1: Apple

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