Financial Analysis of Apple

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Executive Summary The primary intent of the financial analysis of Apple Inc. is to identify the profitability of the company. The objective of a company is to maximize the value of the firm which is measured by the present value of the firm’s future net earnings. The stock price is the most visible public indicator of the company’s ability to procure future earnings. Apple Inc. has consistently beaten analysts’ forecasts and its stock has been consistently prominent on the Nasdaq. Although Apple is notorious for its financial success the true performance indicator is its ability to innovate. Apple has claimed the number one spot on Boston Consulting Group’s most innovative companies list for the past 5 years. Apple has proven to be quite profitable, at least for the past three years based on the financial analysis assessment that follows. Contents Executive Summary 1 Contents 2 Company overview 4 Financial Analysis 6 Return on Equity 7 Net Sales 7 Gross Margin 9 Liquidity and Solvency Analysis 10 Limitations in Ratio Analysis 12 Conclusion 17 References 18 Company overview Apple Computers was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in April 1, 1976 in Cupertino, California and eventually it was incorporated in January 1, 1977 as Apple Computers Inc. Apple Computers marked it’s entrance in the electronic market specifically in the personal computer industry with the macintosh. As time progressed they eventually diversified their product line by developing operating systems and other hardware peripherals. Apple Inc sustained quite a tumultuous timeline with it’s financial successes and losses. As soon as corporate politics entered the stage the exit of Steve Jobs in 1985 was imminent. John Scully, originally appointed by Jobs, was the catalyst behind Jobs departure. Scully took over as President and decisions were made that were in

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