Apple Inc. Research Paper Samples

Introduction

Apple Inc. is an American company based on California that produces computer software and hardware. Initially, Apple Inc. produced Macintosh Computers and later diversified its operation by producing various electronic gadgets and software.
The company was established in 1st April, 1976 and was incorporated in 3rd January, 1977. Initially, for 30 years the company was names as Apple Computers, Inc. The name of the company was changed to Apple Inc. later in 9th January, 2007 because the company was diversifying its business into the electronic gadgets for consumers apart from producing personal computers and laptops. With more than 35,000 employees working for the company worldwide, the company earned the profit of $18 billion in a quarter in 2014. With its rapid and revolutionary improvements in its consumer electronic, the company stood as one of the biggest and reputed company in the world. Its Iphone, Ipad, Macbook and Ipods are highly choosen products while smart watch is in the wish list of many consumers.

Calculate the free cash flows.

Free cash flow is the amount of cash inflow and outflow in the business, which does not take into account the non-cash expenses like depletion, amortization, and depreciation. It is thus, taken as one of the most important indicators of possibilities of Company earning power and the value thus created to the investors. The short-term free cash flow may lure many investors into investing in a Company; however, the main purpose of the free cash flow should be to ascertain benefits in the long term. In the short run, a Company may have lesser free cash flow because of higher spending on investing activities for purchasing the assets in the Company, which will definitely provide returns in the long run. If we analyze the long-run prospects of free cash flow of a Company, we may be able to have a clear picture regarding the Company income power.

Operating Activities

Investing Activities
Financing Activities
Debt structure of the company
The level of leverage for the Apple Company may be calculated by assessing the amount of debt that the Company has compared to the equity that it possesses. This assessment also provides the information as to how well the Company has been able to manage its debts. A large amount of debt in relation to the Company is also not considered to be a good deal for the Company. It could be a sign of future liquidity problems.
The debt to equity ratio for the company is 0.32 meaning that, in comparison to the equity holdings, there is 32% debt. It further means that for every Rs. 100 of equity, there is Rs. 32 of debt. This is a conservative ratio if we make a comparative analysis of the industry. The Company may utilize some higher debts, given that it suits the optimal capital structure of the Company.

Compensation of five highest-paid employees

(Source: Sam Colt, Business Insider)

Position: CFO

Compensation: $4,517,720
Stock option: Claim to bonus shares and right shares and employee shares provisions in the Company
Position: CEO
Compensation: $ 9,222,638
Stock options: claim to right and bonus shares and employee share provisions
Position: Vice President
Compensation: $73,351,124
Stock option: Claim to bonus shares and right shares and employee shares provisions in the Company
Position: Senior Vice President
Compensation: $14,002,801
Stock option: Claim to bonus shares and right shares and employee shares provisions in the Company

Position: Senior vice President Operations

Compensation: $ 24403235
Stock options: claim to right and bonus shares and employee share provisions

Value of the Company:

The value of the Apple Company may be assessed using the Enterprise Value method. Enterprise value is an alternative method to the conventional market capitalization, which is a reflection of the value of the entire business in the market. The Company’s worth that is believed to be existing in the market is given by the value of enterprise value. The main feature of this value is that it takes into account the costs of the business, which comprises both debt and equity. This means that it accounts for the claims of accumulation of debt holders, security holders, preference shareholders, common stock shareholders and other minority shareholders of the Company (Ycharts.com). It is different from the market cap in the sense that it only captures the overall value of the securities of the common equity. This value is also known as the purchase price of the business. Whenever there are a buying and selling transaction regarding the Company in the future, the purchaser will have to pay this price to take over the debt of the business and attaining all rights to the earnings of the Company. The recent reports on the Company status suggest that the value of the Company has reached $700 billion and there are speculations that the Company is going to reach a value of about $1 trillion and eventually become the first Company to do so (Solomon, Jesse).

Overall Impression of the Company

The analysis of the financial aspects of the Company compels us to believe that there have been great results for the Company when it comes to investment. The new investors should try to have a good picture of the Company balance sheet and draw a picture of the overall financial situation of the Company. For investing at a certain point in time, it is necessary that the balance sheet of the Company be well analyzed so that the potential of the Company can be well identified.
The balance sheet of the Company Apple has been presented in the Investor News Sections of the Company books of accounts (Marketwatch.com). There can also be an access to the balance sheet that is yet to be audited and can be assessed through the quarterly income of the Company.
The balance sheet analysis of the Company gives us the information that the whole balance sheet has been broken into liabilities, assets and the equity relating to the shareholders. The sum of the assets should equal the Company liabilities and the shareholder’s equity combined together. The figures given in the balance sheet of Apple comprise of $231.839 billion assets, $120.292 billion liabilities and, $111.547 billion of total shareholder’s equity.
The cash position of the Company is also found to be strong, with $13.8 billion, of cash and cash equivalents and marketable securities to an extent of $11.23 billion. This means that the Company is in a strong liquidity position. The cash chest is thus ample. A large share of this amount is present in overseas accounts, and there are tax provisions to be fulfilled for the Company to make payments for these currencies to be brought in. The borrowing of money in the country itself thus funds the share buy-back program (Chen, Xing, and Yuanyuan Pan).
The value of accounts receivable is present up to the amount of $17.4 billion. This amount of owing is because of the companies that are indulged in business with Apple and also the amount that needs to be paid to retailers, wholesalers, education customers, education customers and the hardcore business clients. There are, of course, certain limits of risk associated with the extension of credit activities. Thus, an insurance system has been developed by the Company to prevent it from risky transactions. As per the famous 80/20 rule of the credit risk and sales forecast, the top two customers of the company comprise the 10 percent of the Company’s accounts receivables.
Another aspect to note in the balance sheet of the Company is the long-term marketable securities that from about $130.16 billion of the balance sheet. This means that there is about $79 billion investment that comprises the corporate securities. Another formation aspect is the $22 billion amount investment in the US treasuries. The risks of interest rate are evident in the investments in case the interest rates are in a rising trend. There is also a high investment of $20 billion in long-term assets like property, plants and equipment aspects. This is the representation of the value, which is owned as a part of the property, plant and equipment factor when the depreciation has been taken into account.
The intangible assets of the Company make up a good amount for the Company, with $4.6 billion lying as goodwill. This is the estimate of what value is created out of the Company associations that people make with the brand, Apple. The Company was able to increase its goodwill by the share of $2.2 billion, which was because of its association with the Beats Music for a transaction of $2.6million in the month of July in the year 2014. The acquisition activity resulted in the financial viability from the cash holding that the Company had.

Works Cited

Sam Colt, Business Insider. 'The Highest-Paying Jobs At Apple [RANKED]'. Business Insider Australia. N.p., 2014. Web. 24 Apr. 2015.
Solomon, Jesse. 'Apple Now Worth A Whopping $700 Billion'. CNNMoney. N.p., 2015. Web. 24 Apr. 2015.
Ycharts.com,. 'Apple Enterprise Value (AAPL)'. N.p., 2015. Web. 24 Apr. 2015
Chen, Xing, and Yuanyuan Pan. Evaluation Of Google And Apple. 1st ed. 2015. Print.
Marketwatch.com,. 'Apple Inc.'. N.p., 2015. Web. 24 Apr. 2015.
PayScale,. 'Fortune 100'S CEO To Employee Incomes Compared'. N.p., 2015. Web. 24 Apr. 2015.