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FINANCIAL ANALYSIS: TEMPLATE

NAME: James Smith

EXECUTIVE SUMMARY:

The Apple Corporation was established in 1976 and was first referred to as a personal computer, their greatest agenda was to help people realize their potentials through using their products. Apple Corporation is located in the USA and it operates under the software and programming industry; its products are very competitive compared to their competitor’s products. The company products are iPhone, iPad, Apple TV, iLife , iPod, iPad mini, OS x, IoS and iwork. The company produces quality products which matches the demand in the market since the managers seems well adverse with what excites people concerning the products. The company is performing very well with high net income and thus profitable enough to issue dividends to its shareholders. The new product introduced recently is the Apple TV which is doing well in the market, although generally the market share of the company is growing though not compared to how it used to perform in the past.

SWOT ANALYSIS:

Strengths

1) Loyalty in terms of the products it produces since the company products have been performing well compared to their major competitors as is regarded the pioneer of personal computers.

2) Additional strength is that the corporation is self-sufficient thus it does create internal components of its own computers core.

3) Customer loyalty is prevalent since customers are interested with the high quality products provided by the company regardless of the price of the product in the market.

4) The company has a very strong financial performance in terms of gross profit, cash and lower or no debt and therefore the company is capable of acquiring other firms that could help in value enhancement.

Weaknesses

1) The corporation operating systems and other products are incompatible with other devices and operating systems produced by other companies.

2) The market share of Apple Inc. has been declining recently which is highly attributed by the technological flaws associated with their products due to inconsistency.

3) The products of Apple Company sell at high prices which makes it hard to remain competitive in the market as other competitors join and offer similar products at affordable prices.

4) Recently the new products produced by the company have had various defects which inhibit their success in the market, some of the defects included faults in battery life and the iPod screen.

Threats

1) Rapid technological change is the main threat to the company since the technology is consistently transforming thus the competition increases.

2) Price pressure affect the corporation since its major competitors produces their products at a low budget cost that are very appealing to consumers and thus the highly priced Apple products market share is declining.

3) New initiative by competitors in the online music market is a threat to Apple Company since its competitors would perform well in the industry.

4) Currency fluctuations or appreciating dollar of the exchange rates of the country currency have been fluctuating which affect the demand for the company products and negatively influence the revenues of the company in global market.

RECOMMENDATIONS AND JUSTIFICATIONS:

1. RECOMMENDATION #1: Should the firm increase their capital expenditures to increase competitiveness? This will almost always be true but what segments of the business get the most capital allocated to them and why?

2. RECOMMENDATION #2: Should the firm increase growth by acquiring other companies for synergies or grow internally? Do they have the infrastructure to grow internally? If they get acquired by a competitor, how will the merger be integrated in regards to culture, overlapping businesses, etc.

I agree with this recommendation. I think that Apple is already such a large company and also very profitable, that in order to grow they need to buyout other rising companies. I absolutely think they have the infrastructure to grow internally assuming they come up with a new product and/or buyout another. I do not see them getting acquired by any other company. I would actually see them buying out some of their competitors because again they are doing so well financially. Since the company is so profitable and large, I really see this recommendation as being the best and most effective one for Apple to grow.

3. RECOMMENDATION #3: Should the firm risk increasing their leverage (debt) to increase earnings and return on capital or keep the leverage the same (or even decrease it). If so, why and by how much.

4. RECOMMENDATION #4: Should they increase marketing spending? If so, by how much and where should it be allocated. Should online marketing spending and international marketing increase by more than print ads? Justify any additional spending that is recommended.

5. RECOMMENDATION #5: Should the firm increase/decrease R&D spending? If so, by how much. At what level do you feel your chose firm would be spending too much on R&D.

6. RECOMMENDATION #6: How should they go about controlling costs including labor, health care, and pension liabilities? (GM and Ford need help in this department).

7. RECOMMENDATION #7: Should the firm expand overseas? If so, which markets should be focused on first and why?

CONCLUDING THOUGHTS ON THE FUTURE OF YOUR CHOSEN COMPANY

I think that Apple is the gold standard on how a company should operate in order to grow and increase profitability. They have done an excellent job at setting their product apart from other similar companies and in fact, they are probably the most imitated because their product is held in such high regard. I think the future for Apple is a good one as long they continue to offer high quality products and make smart decisions on acquiring other businesses.