Apple Inc.

was founded in 1976 is an American Multinational corporation, specialised in

manufacturing consumer electronic and computer products. Till 2006 it was known as Apple
Computer Inc. but in 2007 they dropped the word Computer due to diversification of their
products in making ipods and Mobile phones (iphone). Apple has more than 35,000 employees
worldwide and an annual sale of $9,870 million in year ending September 2009. It is one of the
market leaders in Computer industry and even in mobile phone industry with its latest innovation
and technology. Apple(UK) Limited is just a part of the company based in London, which is one
of the major market for Apple Inc. The market share of Apple Inc. as per years can be seen in the
graph 1.1 below. The market rate range for Apple Inc. shares which is listed in NADAQ
currently in last year can be seen in graph 1.2 the company has tremendous growth in shares in
last year even in the time of recession. The company is progressing through its new technologies
and a type of unique products which has given them a hold over the market. Apple Inc. is
considered as a parent company with its subsidiaries like Apple UK, Pixar animation, Apple
sales international and Apple sales Ireland.

Current Ratio - We can see that current ratio of the company has gone down from 2.29 in 2008
to 1.88 in 2009; this is because the amount of current liabilities has increased more when
compared to current assets. However, the company asset retirement obligation (ARO) liability
has also increased from $ 21 million to $25 million in year 2008 and 2009 respectively, which
forms the major reason in decline of current ratio. When compared to HP the current ratio of the
company in year 2008 is far ahead then HP, this is because HP's current liabilities is more than
current assets of the company.

Acid test/Quick test ratio - Acid test or quick asset ratio we can see that even after gaining
profit there is a decline in quick ratio which has fell from 2.26 in 2008 to 1.86 in 2009, this is due
to decrease in inventories of the company as Apple's most of the inventories is in form of
finished goods, and increase in current assets of the company but at the same time as discussed
before the amount of change in liability of the company is more than its asset which gives
decline in quick asset ratio of the company. Hp's ratio is declining as well when compared to
Apple, it is far behind it due to higher amount of current liabilities.

ROCE (%) - The total returns of the company on its capital has also declined to a good margin,
it has fell from 27.06 in the year 2008 to 23.10 in 2009. However there is an increase in income
before tax but at the same time there is also increase in assets and current liabilities is also
increasing but in less margin compared to assets. The company's capital is being distributed more
in its assets. Compared to HP the ROCE is 19.05 in 2008 which is less than Apple so the
company is doing far better than its competitors.

ROE (%) - The Return on Equity has also declined from 32.79 to 28.69 in 2008 and 2009
respectively, this due to greater amount of increase in shareholders fund and less increase in
profit when compared to shareholders fund. HP's ROE is just 20.53 which is way below Apple,
this gives the company an upper hand than its competitor, as people would like to invest more in
Apple than HP due higher amount of ROE.

Gross Profit Margin (%) - Even in the time of recession, company has increased its GP
Margin which was 34.31 in 2008 and increased to 35.96 in 2009. This is due to increase in gross
profit of the company and also the turnover of the company has increased due to its new products
in market, which shows that company is making good profit. HP has a GP margin of 10.39 which
is way low when compared this shows the market share and profitability of the company.

Net Profit Margin - The NP margin of the company has also increased showing that there is a
growth in the company from 21.23 in 2008 to 21.85 in 2009, the increase is because of higher net
profits and turnover of the company compare to last year, demand of the products and higher
profit margin has helped it to increase. HP's NP is relatively lower, 8.5 in 2008 which shows that
Apple has a better growth rate than HP.

Stockholding period - The Inventory of the company is really low when compared with other
companies as its primary inventories consists of finished goods and also the demand in market
has helped the company by using FIFO method to reduce the stockholdings which has reduced
from 8.71 days to 7.10 days in 2008 and 2009 respectively due to reduction in inventories and
increase in cost of sales. HP stock holding period is 32.09 days which gives illiquidity in the
company.

Receivables collection period - The number of days in Receivables has been increased as
compared to last year to 33.58 from 27.22 days this is because company's one of the customer
has accounted 16% of receivables in 2009 which was 10% in 2008, however the debtors has also
increased in this year resulting in increase of this ratio. HP has a ratio of 47.04 days which is
relatively higher than Apple.

Sales revenue per employee - The amount of sales revenue per employee has increased in 2009
to 99,285.33 from 91,233.15 in 2008 this is due to increase in sales of the company and increase
in lesser amount of employees. HP has a ratio of 539, 374 which is extremely good for HP and
Apple should be coping it up.

These were the few major financial ratios of the company which help company to analyze with
its previous year and its competitor.
Value Drivers
The Major Value Drivers which we could see in Apple Inc are as follow:
Proprietary Technology - Apple is one of the leading brands in specialized in innovating new
things and doing it differently the inspiration of making and developing new technology has
helped the company to in its business and also to be a market leader in short span of time, and
has also helped company to earn a good amount of business and profit and is one of the major
key value drivers of the company, in today's world specially in dynamic industry like technology
it is really important to be an innovator and come up with new products every time as it is gives a
head over your competitors.

Competition - Even the competitors of the company are the value drivers as it helps company
and motivates them to be at the first place in the race of market leader, it pushes them for
continuous improvements and improvements in their products and services. It defends in the
clearly defined market niche which is defensible and helps Apple to separate its product from a
commodity.
Market Demand & Profitability - The demand for the products and services given by Apple is
increasing day by day for eg:- iphone, Macbook air, ipod touch etc in itself has separated
themselves from other products in the market and the demand for such products helps and
motivated company to be in the market and produce a better product every time. People are
ready to give the amount asked by the company for their product intern giving them a huge
success and a better profit margin even in the time of recession, company has a positive cash
flow and profit due to the demand created in the market.
Customer Loyalty - Due to the demand of the Apple products the company has created a really
strong customer database who are loyal to the company and prefer using only apple products,
this loyalty towards a brand has helped company to drive themselves in new market and also in
diversifying their products. These customers brings the actual business and profit to the company
and also help company to bring new customers and push them to keep an edge over their
competitors and in continuous improvements in the company.
Management Depth - Apple CEO Steve Jobs is a value driver for company in himself, due to its
dedication and its faith in company which has helped other employees in the company to work
efficiently and dedicatedly towards the company, its deal to the company in working for just $1
showed how much faith he has and also taking proper decision by him has helped the company
to be in the place where it is. Co-founder and now the CEO has helped the company in achieving
its goals and being the market leader.
These were the few value drivers of the company there are many such value drivers such as
growth, cost of capital, no debt etc. which can be discussed and are few the other value drivers of
the company.
Conclusion
As per the analysis we could see that apple is one of the leading brands and profit making
company even in the time of economic downturn. As per the different ratios and yearly
comparison also showed that though company's ratio comparatively has declined but when
compared with its competitor Apple Inc. is far ahead of its competitor. Value drivers discussed
helped us to show the reason for the company's growth and profitability of the company it also
helped us to show the company's management and customer loyalty which forms the base of the
company. Previewing all the things we can say that Apple Inc. is one of the better company's in
its industry and has also been a market leader for several years which has improved efficiency
and also in innovating new technologies in market.