Milestone Three: Projections Assignment | Essay Help Services

Review the Milestone Two Guidelines and Rubric (attached). Prompt: In this milestone, you have two tasks. First, predict your company’s future behavior through forecasting, projecting its likely performance based on the most recent year of financial information. Then, explain the incremental impact of a hypothetical but reasonable and simple new investment project, such as a new product or facility or a cost-cutting investment, as an initial step in thinking about the future. To justify your findings and projections, you need to include accurate and relevant data tables that explain how the numbers were informed by existing information and model different scenarios. Be sure to address the following critical elements: IV. Projections: Using what you know about the company’s financial health and performance, forecast its future performance. In particular, you should: A. Project the company’s likely consolidated financial performance for each of the next three years. Support your analysis with an appendix spreadsheet showing actual results for the most recent year, along with your projections and assumptions. Remember that your supervisor is interested in fresh perspectives, so you should not just replicate existing financial statements: You should add other relevant calculations or disaggregations to help inform decisions. B. Modify your projections for the coming year to show a best- and worst-case scenario based on the potential success factors and risks you identified. As with your initial projections, support your analysis with an appendix spreadsheet, specifying your assumptions and including relevant calculations and disaggregations beyond those in the existing financial reports. C. Discuss how your assumptions, forecasting methodology, and information gaps affect your projections. Why are yourprojections appropriate? For example, are they consistent with the company’s mission and priorities? Aggressive but achievable? How would changing your assumptions change your projections? Rubric Guidelines for Submission: Use the Final Project Template to complete this assignment. Your report should be approximately 5–7 pages long (excluding the title page, spreadsheets and graphs, and the references list). It should be double spaced, with 12-point Times New Roman font and one-inch margins, and use the latest guidelines for APA formatting for references and citations. Please include your name, course name, and report title on the title page.

The Financial Health and Performance of Apple Inc.

 

Yahaira Flatts

Southern New Hampshire University

MBA-520-Q4874 Acct & Financial Analysis

Dr. Carl Vann

May 3, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Financial Health and Performance of Apple Inc.

Organizational Context

Apple Company is an American based international corporation with its headquarters in Cupertino, California. The corporation was established in 1976 by Steve Jobs and his close allies when they developed Apple 1 personal machines (“Apple Newsroom” 2019). Ever since, Apple has been afloat in techno-business with its research, innovation, and development rigor, ensuring the company remains competitive even in the dynamic technological world. The company boasts of permanent 130,000 employees in its production line with other employees distributed globally for sales and marketing purposes (“Apple Newsroom” 2019). Apple Company has a global reputation due to its multinational influence and financial overturns. Apple Inc. boasts of revenue overturns exceeding 150 billion dollars yearly, being the only company with a valuation of more than 1 trillion dollars (“Apple Newsroom” 2019). For example, in 2018 alone, Apple Inc. had a revenue overturn of about 260 billion dollars from its autonomous sales. Apple is globally considered a tech-giant along with other companies such as Google and Microsoft. Strategic management and excellent organizational corporate leadership have stimulated the company through shifting economic times. In turn, this has ensured that Apple Company remains a competitive global brand.

Key Goods or Services/Features

Essential goods and services provided, for whom, where, and why. Typically, Apple Company is fundamentally involved in planning, conceptualizing, developing, manufacturing, and marketing technological devices, electronics, and online service-oriented software.  Apple Company manufactures several products such as iPhone (smartphones), iPad’s (tablets), iPods, Mac computers, wearable’s (apple TV, apple watches, home Apple pads, and other Apple-branded home accessories) (Ritholtz, 2017).  The company has a niche in three markets by diversifying its products to the smartphone market, tablet market, and the personal computer market. Apple has also manufactured several software products such as the operating system, which supports several smartphone systems, macOS for running computers, and wtOS for watches. The company also has several online utilities such as Shazam, iTunes application, iWork creative as well as other media pro applications which allow users to access digital content such as videos, movies, and podcasts.

Apple’s product market scope ranges from corporate businesses and organizations to individuals globally. Primarily, Apple products are specially designed to meet both individual and organizational needs across the globe.  To achieve its global agenda, Apple has retail shops around the world in approximately more than 150 countries (Ritholtz, 2017). The company aims at breaching the technological gap in the corporate world as well as modernizing and digitalizing the evolving parameters of the society through providing hardware products as well as online services. These facets include education, access to mass media, access to information, and creating a technological virtual reality for both individuals, corporate entities, and even governments. The company employs a third-party small scale, mid-scale, as well as a wholesale seller for the global distribution of its products.

How features of the organization help set the boundaries for business decisions. Due to the ever-changing technological world, Apple Company aims at providing innovative products that meet consumer needs and provide satisfaction while remaining viable in the current technological world. As a result, any business decision made is usually aimed at improving the quality of their products based on the customer’s responsibility. With its massive creative ability, the company is committed to utilizing its enormous power in operating system development, hardware, and accessory manufacture to provide user-friendly technology-based products and services. As its development and business strategy due to the vastness of its market, the company leverages introducing new introspective ways of accessing digital content by diversifying its online service platforms. The company has also established a software development community and hardware research that complement its proficient inventions (Ritholtz, 2017). Furthermore, as part of its strategy, the company aims at expanding its market scope both online and retail to meet consumer requirements.

Apple Inc. Business Organization

Apple Company, currently headed by Tim Cook as the chief executive officer, is administered basically on a geographical basis with an organized management system that coordinates the different geographic management facets. Apple’s management is fragmented across the different continents and nations, i.e., south and North America, Europe, Asia, Africa. Ideally, though similar products and services are offered across the various management fragments, each segment enjoys autonomous management to suit the geographical market structure, ease marketing, and distribution and understand the local market dynamics. Each management fragment is usually answerable to a board of directors that administer the whole company. Besides, since apple operates in three different market scopes, the board of directors controls the general market parameters after feedback from different segment management teams.

Recent Financial Performance

Assessment of Income Statement

Financial performance analysis based on the consolidated income statement. The last Saturday of September marks the end of a fiscal year for Apple Company. The company has, for the past three years, experienced some uncanny dynamical finances in its consolidated financial statement, both in revenues, cash flow, and liquidity values. For the last three years, Apple has a P/E value of 16.8 as compared to the industries 12.5, implying a higher market valuation and financial stability. The company has witnessed gross net incomes of 48.351, 59.540, and 55.256 billion dollars annually for the past three years indicating a stable market and customer base (“Apple Newsroom” 2019). Besides, the company’s depreciation and amortization and depletion have grown in the past three years, from 3 million dollars to 11 million dollars, which indicates growth in its assets, both tangible and intangible. Besides, the company’s profit margins stand out in the range of 39.5% in the past three years, and this shows how stable the company is globally in the competitive techno-business

Assessment of Statement of Cash Flows

Operating Activities

Looking at the underlying financial statement. Based on the consolidated financial reports, the variance of year to year income can be attributed to several aspects. The financial performance of Apple was slightly affected in the fiscal year 2017 by the introduction of new products such as iPhone 7, and iPhone 8 and Apple Watch, making the tech giant struggle to keep a competitive edge in the market. Customers had a negative approach to these products, which resulted in reduced sales even before taxation of about 2.8%. Nevertheless, due to the company’s diversification with cash flow from both services and products, purchases from other Apple accessories and digital content ensured the company stayed afloat in the market. For instance, in 2019, due to reduced sales of iPhones across the globe, apple witnessed a net-financial dip by about 6 million dollars (2.1%) as compared to 2018, in which an increase of 17% was seen in comparison with 2017 (“Apple Newsroom” 2019). Nevertheless, the financial matrix is balanced by increased sales in apple branded home accessories and digital services cash inflow.

Investing Activities

Assessment based on consolidated cash flow statements. Based on the company’s consolidated revenues for the past three years, the company’s cash generation from services has increased year to year, then reduced slightly at the end of 2019. Additionally, revenue generated from investments increased gradually. It’s also notable that the company’s use of revenues has diminished in the past three years. Typically, Apple Company can be said to be healthy financially with a balanced company’s balance sheet since it’s minimizing spending while maximizing cash inflow, excluding activities that are discounted.

Financing Activities

The net cash PepsiCo used for financing activities in 2017 was approximately $4.2 billion, which resulted primarily from dividend payments of $4.5 billion, and repayment of long-term debt of $4.4 billion (net proceeds from long-term debt was $3.1 billion) (see Appendix E). Financing activities include cash inflows and outflows associated with outside financing activities, such as cash raised by selling securities (stocks and bonds) or by borrowing cash from banks (Early & McClure, Fundamental Analysis: The Balance Sheet, 2018).

Underlying Financial Performance

Looking at the underlying financial statement. Based on the consolidated financial reports, the variance of year to year income can be attributed to several aspects. The financial performance of Apple was slightly affected in the fiscal year 2017 by the introduction of new products such as iPhone 7, and iPhone 8 and Apple Watch, making the tech giant struggle to keep a competitive edge in the market. Customers had a negative approach to these products, which resulted in reduced sales even before taxation of about 2.8%. Nevertheless, due to the company’s diversification with cash flow from both services and products, purchases from other Apple accessories and digital content ensured the company stayed afloat in the market. For instance, in 2019, due to reduced sales of iPhones across the globe, apple witnessed a net-financial dip by about 6 million dollars (2.1%) as compared to 2018, in which an increase of 17% was seen in comparison with 2017 (“Apple Newsroom” 2019). Nevertheless, the financial matrix is balanced by increased sales in apple branded home accessories and digital services cash inflow.

Current Financial Health

Assessment of Capitalization.

Apple’s current capitalization. Apple has become the first company to pass 1 trillion dollars in its market value and capitalization. Using the ratio analysis method, Apple Inc. can be said to be financially healthy (“Apple Newsroom,” 2019). For instance, for the last three years, there has been an increase in P/E as inferred to the S/P ratio from approximately 17% in 2017 to about 30% in 2019, which is forecasted to continue increasing exponentially (“Apple Newsroom” 2019). Also, it is notable how shareholders are in good faith with the company after receiving an approximate stable return in the range of 35% with an average estimate of EPS of 8 dollars.

“Cash and cash equivalent.”-Apple cash and cash equivalent declined by 2% in the 3rd quarter of 2019 (June-September) but remained constant in the coming quarters (“Apple Newsroom” 2019). Apple’s fiscal earning increase by a margin of 3%.

Equity capitalization. -In totality, current Apple boasts of an equity index of 97.5 billion dollars, which is inclusive of 44 billion dollars as the valuation of stock rates, and 56 billion dollars as hold-on earnings (“Apple Newsroom” 2019). As a result, Apple has an efficient capital structure by capital utilization and an increase in equity.

Financial position to stir growth and pay bills and payroll-Apple has a D/E ratio of 0.5 with a shift to 1.2, indicating the dynamism in the financial markets (). Apple Company is financially well placed to stir growth and development in the future. With the current capitalization, the liquid flow cash is expected to satisfy the operating needs, material purchase, manufacture and production, marketing, and innovation. Apple has both tangible and intangible assets that will be able to stir the company development plan.

Assessment of Growth

Financial position to stir growth and pay bills and payroll-Apple has a D/E ratio of 0.5 with a shift to 1.2, indicating the dynamism in the financial markets (). Apple Company is financially well placed to stir growth and development in the future. With the current capitalization, the liquid flow cash is expected to satisfy the operating needs, material purchase, manufacture and production, marketing, and innovation. Apple has both tangible and intangible assets that will be able to stir the company development plan.

Assessment of Financial Value

Financial value analysis. Currently, Apple has a liquidity ratio in the range of 1.28, which is higher than the cash and quick rate. Ideally, this indicates Apple’s ability to meet current short term requirements. Currently, Apple has a market value of 293 billion dollars (“Apple Newsroom,” 2019). Furthermore, the company has a share value of 293 dollars to earning cost of 12.7 hence a PE value of 23.81. As a result, investors are willing to pay more for share values due to the potential of future growth exhibited by the Apple Company’s current financial parameters.

            References

Apple Newsroom. (2019). Apple Reports Fourth Quarter Results. Apple Newsroom. Retrieved 25 April 2020, from https://www.apple.com/ke/newsroom/2019/10/apple-reports-fourth-quarter-results/.

MEYER, P. (2019). Apple Inc.’s Organizational Culture & Its Characteristics (An Analysis) – Panmore Institute. Panmore Institute. Retrieved 25 April 2020, from http://panmore.com/apple-inc-organizational-culture-features-implications.

Ritholtz, B. (2017). The Big Four of Technology. Bloomberg.com. Retrieved 25 April 2020, from https://www.bloomberg.com/opinion/articles/2017-10-31/the-big-four-of-technology.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix A

Apple Product Offerings

 

 

 

 

      Appendix B

Consolidated Statement of Income

Apple Inc

 

 

Recent financial performance (EPS growth)

 

Apples consolidated cash flow.

Current market capitalization

Current fiscal capitalization

Apples current market value

Consolidated sales  statement

Consolidated operation statement

 

 

 

 

 

 

 

 

 

Analysis of Apple Inc and Key Success Factors and Risks

 

Yahaira Flatts

Southern New Hampshire University

MBA-520-Q4874 Acct & Financial Analysis

Dr. Carl Vann

Sunday May 10, 2020

 

 

 

 

 

 

 

 

Analysis of Apple Inc key success Factors and Risks

Apple, Inc has developed to become one of the most successful technology companies in the world and the United States. The organization began its operations in producing highly innovative computer products in 1976. Apple Company has rapidly increased its production and penetration into markets across the world through innovation and unique branding. Apple products, including iPhones, computers, and online stores, are the most expensive as compared to other products serving similar purposes, such as HP computers. It cost about $350 to purchase an HP computer with appropriate software, speed, and memory. On the other hand, it cost about $1,000 to purchase a computer from Apple with similar memory, speed, and software as the HP models. Current economic reports in the Apple, Inc show that the company rakes in about $167 billion annually in iPhone sales and computer sales of up to $25 billion with 41% market share in the United States. Apple competitors such as Samsung have a market share of 21% in the United States (Digital information world 2020). The company has witnessed an increase in its market share over the past ten years with penetration in Africa and Asia. Despite its growth, Apple, Inc must consider the available success factors and risks for further decision-making to enhance competition.

Financial and Strategic Priorities

Brand

Apple, Inc has extensively focused on branding and creating a unique brand that is associated with the high income individuals. Apple brand, which is highlighted using its Apple mark at the back of the electronic devices, is unique in appearance and the innovative nature of the software. Apple has invested in new technology to develop a unique brand that fits into the market. The current generation prefers unique products in terms of technological devices that have been provided by Apple through exceptional computer features such as iCloud, which is a cloud storage system (Apple Inc, 2019).

Partnerships

Apple, Inc has increased its market penetration and product development through a partnership with multinational companies, including Cisco, Accenture, IBM, Box, and SAP. The company has also ventured into partnerships with companies in China, India, and Canada to create more access to the market. The German software company SAP is involved in the development of customer management systems that fits into the current digital market (Apple Inc, 2019).

People

Apple, Inc targets people, particularly the computer and iPhone users. The company has developed products that facilitate employee management and interaction for other organizations. Apple has described its products simple and effective to fit into the tastes of the middle and upper class. The use of Apple products is mainly by high-income individuals, which has been the target of the company. Apple allows its employees to work under a flexible schedule using a remote working model (Apple Inc, 2019).

Key Non-Financial Success Factors

Innovations and Differentiation

Apple, Inc has managed to expand its market portfolio through constant innovation. The company has highly skilled software developers through its partners, which has facilitated innovation. Apple is an undisputed high-tech company when it comes to portable devices such as mobile phones. Apple has developed effective models to attract consumers across the world through innovation. The development of iCloud is an example of innovation by Apple that no other companies realized during this generation of technology. The company also paired business models such as iTunes paired with Apple App Store, which has attracted a mass following by the microcontent consumers. Apple is highly transformative, which has kept it moving forward based on the demands in the market. The innovative nature of Apple has differentiated its products from those of the competitors (Johnson et al., 2012).

Apple has continued to develop innovative products by identifying the needs of the population. The company realized an increase in the consumption of online music across the world, with artists pushing for digital revenue to meet the technological changes (Apple Inc, 2019). In response, Apple created iTunes in 2003, which has become the leading online music store in the world. Apple, through innovation, is able to see beyond the current products in the company. It monitors its competitors and takes a step forward to achieve high levels of success. The development of a multitouch screen for Apple products chased other competitors such as Blackberry. Apple iPhones are also unique in that it requires user ID to use the devices which prevent theft and loss of personal data. User ID has remained as one of the most innovative ideas by Apple, which enhances competition. The increased investment in new models will likely affect the financial position of the company as innovation requires additional costs. The company, through its management, should recognize the importance of balancing revenue and the cost incurred in the development of software to prevent losses.

Global Partnership

Apple, Inc has continued to forge for partnerships across the developed countries for effective access to the appropriate market. The company has partnerships with software developers in North America and Europe, which crucial for its success. However, the company has failed to recognize emerging markets in the Middle East and Asian countries such as Singapore, where the company has not developed effective partnerships. It must recognize the importance of marketing partnerships and promotions with the leading sports such as the English Premier League, which is the world’s most-watched sport to reach markets across the globe. The company partnered with MVNO Macquarie Telecom in Australia for the supply of Apple products. The partnership with companies outside the United States should not only involve the supply chain, but also, it should encourage innovative collaboration and product development in countries with cheaper raw materials for computer systems. Apple should also forge for mergers and acquisitions with other companies with a mission to develop a global brand that meets the needs of the expanding population. It is important to recognize the growing market in Africa, where the middle and upper class are willing to purchase Apple products. As such, Apple must develop effective partnerships in Africa to compete with other companies such as HP (Apple Inc, 2019).

Expanding eCommerce

Apple is a high-tech company that invested in eCommerce, particularly in the United States and Europe. The company has about 25 stores for delivery of products across the world, which is lower than that of its competitors. The Chinese companies such as Huawei have stores that distribute products directly to the consumers in over 35,000 stores worldwide. The company must expand its online sale of products to reach different parts of the world. The number of stores should be increased as per the demands in the market. However, the expansion of the number of stores worldwide should be guided by eCommerce purchases. Apple, as a unique brand, should stop focusing on the American market as the population will likely shift to other products in the future. Ecommerce expansion by Apple is important for a global presence (Apple Inc, 2019).

Key Risks

Despite the success factors identified, Apple must recognize the potential risks to the products produced to avoid losses in the future. The main risks faced by the company include challenges in recruiting and retaining a skilled workforce, global operation, and disruption of distribution networks. The company must develop effective strategies to mitigate the risks.

Disruptions in its Distribution Networks

Natural disasters are the main causes of distribution network disruption. Apple is exposed to disruptions to its network by occurrences, including hurricanes and global pandemics such as the coronavirus. As such, the company must set up effective storage facilities and online stores to facilitate easy distribution during disruptions. The growing issue of cyber-attacks is another risk faced by Apple. International criminals are increasingly targeting online stores and data storage systems. Apple has been a victim of attacks by cyber-criminals in the past. As such, the company must develop effective security systems for the online stores and data storage system (McBride, 2019).

Productivity Initiatives and Global Strategy

Apple has achieved over 41% market growth in the United States alone, which shows its ability to reach larger markets. The company must increase its productivity while reducing development costs incurred from software creation to prevent losses. Increased access to the global market across the developed and developing countries is also important for the long-term sustainability of business (McBride, 2019).

 

Recruitment and Retention of Key Employees

The high-tech industry faces increased competition for skilled and innovative employees. The leading high-tech companies, such as Samsung, are recruiting employees with exceptional skills in software development. As such, Apple will likely invest more in hiring and retaining skilled labor in the future as the technology sector expands. New companies will introduce competitive compensation and bonuses for skilled labor. The company must develop effective bonuses and motivational strategies for skilled employees to manage the current changes in the labor market. The young generation prefers working from home to enhance satisfaction. As such, Apple should allow flexible scheduling for its employees for retention purposes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Apple Inc. (2019). Apple Products. Apple. https://www.apple.com/sitemap/

Apple Inc. (2019). Business – Partners. Apple. https://www.apple.com/business/partners/

Digital information world. (2020, February 16). Digital Information World. https://www.digitalinformationworld.com/2020/02/how-apple-makes-its-money.html

Johnson K., Phan Y., Singer H., & Trinh J. (2012). The Innovative Success that is Apple, Inc.

McBride, S. (2019, December 2). Half of Apple’s business is at risk. Forbes. https://www.forbes.com/sites/stephenmcbride1/2019/12/02/half-of-apples-business-is-at-risk/#49ce2e775761