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Apple Inc. Financial Analysis

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Apple Inc. Financial Analysis
APPLE Inc. (AAPL)

Accounting and Financial Profile

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Name

Sachitanand Karnakote
Choong Chee Lai
Lei Qiu
Alcides Santopietro
Denisa Voicu

September 2008

Contents

Introduction 2
The company and its activities 2
Industry & Competition 2
Recommendation 3
Accounting choices and Quality of Earnings 4
Ratios analysis 6
Liquidity: 6
Solvency: 7
Profitability: 8
Market: 8
Relevant Disclosures 9
Risks 9
Analysis of Apple Inc. corporate strategy 10

Introduction

Our group decided to analyse the company Apple Inc., listed on Nasdaq Market as AAPL. The analysis was mainly based on the annual financial report of the company for the fiscal year ended on September 29th 2007. Apple Inc. is today one of the most innovative, creative and admired companies worldwide. Our choice was based on a simple motto that one should know the business of a company to have a better understanding of its financials. Four of us in the group have worked in the IT industry and the other person has owned Apple stock in the past. All of us have used or are using products made by Apple inc.

The company and its activities

Apple Inc. and its subsidiaries design, manufacture and market personal computers, consumer electronics and software products. The company’s best-known hardware products include Macintosh line of PCs (43% of the company’s sales), iPod line of portable media players (34.6% of sales) and iPhone, a multimedia smart phone. Apple’s software products include Unix-based Mac OS X operating system, iTunes, iLife suite of multimedia and creativity software, and Final Cut Studio. As of June, 2008, the company operated 215 retail stores.
The company’s earnings profile has changed in the recent years: iPod is a product that may be reaching its maturity, so important growth rates should not be expected for the future. Macintosh computers (desktop + portables) are steadily growing and we can project the same pace in the near future (market shift to
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