FM-6CA

Running Head: APPLE INC. 2

APPLE INC. 2

Apple Inc.

Apple Inc. is one of the biggest companies in the United States. The founders’ Steve Jobs and Steve Wozniak established it in 1976 (Lockamy III, 2017). The main line of business was the sale of personal computers. However, the company bringing the first smartphone that attracted incredible growth and diversity in the market. Therefore, the company engages in manufacturing and selling consumer electronics, computer software, and online services. The vision of the company is to provide the customers with user-friendly and non-intimidating technology at affordable prices. This is to ensure the computer users are comfortable with the interface. Therefore, the company's mission is to bring the best personal computing experience to all people. The company boasts of being the most successful company in the designing, manufacturing, and marketing of smartphones, personal computers, and other products such as iPad and home accessories. The company has been increasing its profitability with a high return on the stock of 331% in 2019 (Moon & Phillips, 2021). The increased growth in the company has been due to the increased capitalization in the technological dependence areas. The company also improves the existing technology to create demand for new products through the transformation of innovation. Apple Inc. enjoys dominance in the United States, but more growth due to the improved technologies that fit the emerging markets.

Apple Inc. had grown to a trillion-dollar company from a small beginning in 1976. The company capital structure shows the equity or the debt that in financing the operations. Apple total stockholder's equity as of 2019 was $96.5 billion (Lockamy III, 2017). The second component of the company's capital structure is the debt, which is the accumulation of how much the company owes to the creditor. The current liabilities in the company are those that mature in one year. In 2019, Apple Inc. had current liabilities of $89.6 billion. The long-term debt amounted to $136 billion and a total liability of $225.8 billion (Lockamy III, 2017). The capital structure of Apple Inc. is a significant point of discussion for the shareholders. This is because it affects the company firm value. With the company being the most valuable and overcoming others such as Google and Microsoft, the shareholders need to understand the performance over time. A valuable capital market by the changes in the capital structure. When a company uses a combination of debt and equity, it should remain the same.

Apple Inc. debt-to-equity ratio has grown over the years. This is because the company has been expanding its operations to various parts of the world. Comparing the debt-to-equity ratio in the company in 2016 was 50%. However, by 2019, this ratio rose to 112%, showing a quick change in the capital structure (Lockamy III, 2017). Therefore, the bankers use the enterprise value to determine the cost of purchasing the business. The company has been decreasing its debts and hence improving the enterprise value. The enterprise value grew from $600 billion in 2016 to $1.12 trillion in 2017 (Moon & Phillips, 2021). The company, therefore, has enhanced the brand and the innovative design coupled with the efficient capital structure to enhance the competitive advantage. This has fostered growth in the company and increased its penetration into various parts of the world. This is the reason the company is leading in the technology industry. With innovations, it has increased demand in the market and attracted more customers, including women and children. The profit margins are high, whereas the debt is moderate, making the shareholders more confident in their investment.

References

Moon, S. K., & Phillips, G. M. (2021). Outsourcing through purchase contracts and firm capital structure. Management Science, 67(1), 363-387. https://pubsonline.informs.org/doi/abs/10.1287/mnsc.2019.3443

Lockamy III, A. (2017, July). An examination of external risk factors in Apple Inc.'s supply chain. In Supply Chain Forum: An International Journal (Vol. 18, No. 3, pp. 177-188). Taylor & Francis. https://www.tandfonline.com/doi/abs/10.1080/16258312.2017.1328252