| FIN534: Financial Management
Name: Sara Pilgrim
Professor Name: Dr. Ingrid P Nelson
Date: 11/17/2024 |
| Company Analysis |
| U.S. Stock exchange: Company Name: Apple Computer, Inc. |
| Company 1: Intel Corporation |
Company 2 : Microsoft Corporation |
| Determine the free cash flow for the last two most recent years for the two companies. |
| 2022: 11.5 Billion 2023: 11.9 Billion |
2022: 59.61 Billion 2023: 67.44 Billion |
| Explain how a company’s free cash flow (cash flow from operating activities minus capital expenditures) impacts its growth potential. |
| See attached work document |
| Instructions: Find the numbers for these calculations from the income statement or balance sheet for each company from the annual report or 10-K. Make sure the numbers are not from the 10-Q or quarterly report as you want to make apples to apples comparisons. |
| Your Name: |
Sara Pilgrim |
| Industry: |
Technology |
| Company 1 Name: |
Apple Computer, Inc. |
| Company 2 Name: |
Intel Corporation |
| Company 3 Name: |
Microsoft Corporation |
| Income Statement Information |
| Total Revenue |
| Apple Computer, Inc. |
$383,285.00 |
| Intel Corporation |
$54,228 |
| Microsoft Corporation |
$211,915.00 |
| Gross Profit |
| Apple Computer, Inc. |
$169,148.00 |
| Intel Corporation |
$21,711.00 |
| Microsoft Corporation |
$146,052.00 |
| Net Income |
| Apple Computer, Inc. |
$96,995.00 |
Note: Choose Net Income or EBITDA. Generally accepted accounting principles (GAAP) only requires the use of Net Income and EBITDA is optional. Foreign companies generally do not follow GAAP and use EBITDA because it normally makes the numbers look better. |
| Intel Corporation |
$1,675.00 |
| Microsoft Corporation |
$72,361.00 |
| EBITDA |
| Apple Computer, Inc. |
$125,820.00 |
| Intel Corporation |
$9,695.00 |
| Microsoft Corporation |
$102,384.00 |
| Balance Sheet Information |
| Total Assets |
| Apple Computer, Inc. |
$352,583.00 |
| Intel Corporation |
$191,572.00 |
| Microsoft Corporation |
$411,976.00 |
| Total Liabilities |
| Apple Computer, Inc. |
$290,437.00 |
| Intel Corporation |
$81,607.00 |
| Microsoft Corporation |
$205,753.00 |
| Total Stockholders' Equity |
| Apple Computer, Inc. |
$62,146.00 |
| Intel Corporation |
$109,965.00 |
| Microsoft Corporation |
$206,223.00 |
| Ratios Calculations |
| Calculate the Following Ratios: |
| Debt to Equity Ratio Formula (Total Debt/Total Equity) |
Total Debt |
Total Equity |
Debt to Equity Ratio |
| Apple Computer, Inc. |
$290,437.00 |
$62,146.00 |
4.67 |
| Intel Corporation |
$81,607.00 |
$109,965.00 |
0.74 |
| Microsoft Corporation |
$205,753.00 |
$206,223.00 |
1.00 |
| Gross Margin Formula (Gross Profits/Sales) |
Gross Profits |
Sales |
Gross Margin |
| Apple Computer, Inc. |
$169,148.00 |
$383,285.00 |
44% |
| Intel Corporation |
$21,711.00 |
$54,228.00 |
40% |
| Microsoft Corporation |
$146,052.00 |
$211,915.00 |
69% |
| Operating Margin Formula (Operating Income/Sales) |
Operating Income |
Sales |
Operating Margin |
| Apple Computer, Inc. |
$114,301.00 |
$383,285.00 |
0.30 |
| Intel Corporation |
$11,471.00 |
$54,228.00 |
0.21 |
| Microsoft Corporation |
$88,523.00 |
$211,915.00 |
0.42 |
| Find the appropriate amounts from the 10K annual report and insert them into the formula to calculate. |
| Formulas |
Apple Computer, Inc |
Intel Corporation |
Microsoft Corporation |
| Profitability ratios: |
| Profit margin = Net Income/Sales |
0.25 |
0.03 |
0.34 |
| Return on equity = Net Income/Shareholders' Equity |
1.56 |
0.02 |
0.35 |
| Efficiency ratios: |
| Inventory turnover = Cost of Goods Sold/Average Inventory |
33.82 |
2.92 |
53.03 |
| Accounts receivable turnover = Net Sales/Average Accounts Receivable |
12.99 |
74.18 |
-51.85 |
| Leverage ratios: |
| Debt to equity ratio = Total Liabilities/Shareholders' Equity |
4.673 |
0.742 |
0.998 |
| Debt/Assets = Total Liabilities/Total Assets |
0.824 |
0.426 |
0.499 |
| Liquidity ratios: |
| Current ratio = Current Assets/Current Liabilities |
0.988 |
1.542 |
1.769 |
| Quick ratio = (Current Assets - Inventory)/Current Liabilities |
0.785 |
1.516 |
1.808 |
| Discuss three takeaways or an analysis of what you’ve learned about each company based on their financial data. Include at least one paragraph for each company. |
| Analysis |
| Apple Computer, Inc |
Apple has demonstrated satisfactory profitability and reasonable operating efficiency. The above-industry average return on equity and profit margins indicate that Apple has a strong ability to generate actual profits from sales in addition to generating high returns for shareholders. Still, debt financing makes up a large portion of its funding methods, which can lead to problems if not managed well. At the same time, Apple still has a comparatively high inventory turnover, which proves the company’s efficient management of inventory. A low liquidity ratio could mean that the company will have difficulty paying off short-term debt without using more funds. |
| Intel Corporation |
During the fiscal years analyzed, Intel showed only average profitability and efficiency compared to companies in its industry, which suggests that it has had some difficulty in converting sales into profits and becoming attractive to investors. However, Intel can succeed in this segment if it has a solid current ratio, and the fact that Intel has a strong current ratio means that the company is able to meet its short-term obligations without any stress. Leverage is a very conservative approach and a lower debt equivalent ratio indicates a lower financial risk. Intel also has a very low account Accounts receivable turnover is a fundamental reflection of good collection practices and efficient credit management. |
| Microsoft Corporation |
Microsoft's profit and cost-sales efficiency are relatively high. The high total Croissance Risqué – Return on Equity and Profit Margin demonstrates how proficiently Microsoft turns its sales into profit and returns worth to shareholders. A moderate debt-to-equity ratio indicates that the company is paying proper attention in using debt, which is actually very important. but at the same time has not over relied on them to finance its activities. Further, the rigidity of turnover ratio indicates good liquidity ratios as Microsoft has the ability to meet its short-term obligations. This food chain’s high inventory turnover ratio means that has an efficiency in its manner of handling inventories. |
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FIN534_Company_Stock_Analysis.xlsx
