The aim of this assignment is to conduct the financial analysis of the Apple Company. The financial analysis of the Apple is based on the financial statement ratio analysis, free cash flow analysis, cost of capital analysis, and Market Value Added and Economic Value Added analysis. Apple Inc. is a company which is formed with the philosophy of continuous innovation. Unlike any other electronic company, Apple has over the years relied on restructuring the entire industry with the introduction of several innovative products. Apple has relied on innovation; to set itself apart from any other brand and has managed to form a globally recognized brand. Through this strategy, Apple has been able to achieve unparalleled success in distinct product markets, regardless of the previous growth in the respective market. Innovation has helped Apple to render the rest of the competition and the market dynamics, as a minimal influence on its performance.
Apple Inc. has announced the new executive leadership team with a mix of senior vice-presidents and business leaders from an outside company. The action of Michael Apple's return as CEO and board restructured is to improve the company's financial performance since 2005. Due to internal organizational structure and a few layers of management, communication with customers has become more efficient. Apple begins to combine direct model concept with traditional distribution channels in order to reach more customers and organization levels in different regions.
ENVIRONMENTAL SCAN ANALYSIS
Apple's success can be attributed to the compound model of innovation. Apple's case of success is not only dependent on one or two dimensions of, such as the design specifications or the software development. A critical analysis of Apple's success model shows that the secret to their success lied in their multi dimensional approach to the innovative process (BBC, 2006). Since the inception of Apple Inc., the company has focused in their design, development, and marketing strategies to attract their target customers. They did not focus in features or prices of their products, rather targeting their customers with their innovation and innovative designs (Lucas, 2002).
In the economic downturn experienced by the modern business environment, the consumers might not be able to afford the Apple products with ease. Since the products offered by Samsung, Nokia and LG offer similar products with reduced costs; consumers might decide to shift their brand loyalties. Apple's real test lies in its ability to progress its process of innovation; in a market which is flooded with products that offer similar functions, but their costs are significantly lower.
FINANCIAL ANALYSIS THROUGH THE USE OF RATIOS
Ratios become good indicators of performance when the results of the current year are compared with those of one or more prior periods. For example, if we compare the ratio of turnover of several fiscal years, we can see if the ratio this year is better than last year. We can also see if our sales are on the rise, and if so, at what rate. The interpretation of financial ratios is ...