Apple’s Financial Performance

Description of Company/ Products and services/ History

Apple is an American multinational company with its headquarters in California. The
company engages in the designing of consumer electronic devices such as phones and
computers. Also, Apple takes part in the development of software and other online services.
There are four big companies in America, and Apple is one of them. The other companies are
Amazon, Google, and Microsoft.as of 2019, Apple had over 500 retail shops across the globe.
Some of their products include Macintosh, iPod, iPhone, iPad, and Apple Watch. The services
that the company provides include iCloud, iMessage, iTunes stores, and Apple news. In the
financial years 2019, the total revenue for Apple company was $260.174 billion, with an
operating income of $63.93 billion (Finkle and Mallin, 2010). The company has assets with a net
worth of $338.52 billion. The approximated number of employees in Apple Inc. is 137,000 as of
the year 2019. 
The founding and incorporation of Apple Inc. took place between the year 1978 to 1984.
The company was founded in the year 1976 by Steve Jobs and Steve Wozniak. Their first-ever
products were Apple I, which was a computer purely designed by Wozniak. The incorporation
took place in 1977 and was done by Wayne, who left the company and sold his shares. In April
1977, Wozniak made another milestone by designing Apple II. Towards the end of the 1970s, the
company had employees that were taking part in the production line. The company started to
publicly sell its shares in 1980 when they first developed their ticker symbol (AAPL). They
managed to sell 4.6 million shares at $22 for each of the shares (Finkle and Mallin, 2010). They
managed to launch the Macintosh in 1984, which was the first computer to be sold that did not
have a programming language.     

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Mission Statement, Strategy and Organizational Structure
In the corporate websites and even in their Form 10K, Apple has not publicly provided
their written mission and vision statements. However, some reports perhaps serve as their
mission and vision statements. The statement includes 

1. We aim at providing the users of Apple products with the best experience through
   innovative devices.
2. The Mac design from Apple and OS X are some of the best professional software, and
   the company has been leading in the revolution of digital music through their iPods and
   iTunes. 
   The organizational structure of Apple is divisional by the process. The fabric can be
   described as hierarchical with the CEO as Tim Cook. However, in the construction, there are no
   presidents of division. Instead, there are Heads of Department that oversees different operations
   within the organization. Their revenue is not reported based on the region and product but as a
   combined unit. The organization has a culture of not collecting all the details of its customers.
   For instance, they do not take part in the storage of iMessage and FaceTime (Finkle and Mallin,
   2010). Their strategy has been towards the maximization of assets and revenue through increased
   sales that will cater to the already existing demand. However, the company has not shifted its
   focus from leading in innovation, and they have been taking part in a continuous launching
   process of their iPhone and iPad products. 
   The mission tells how the organization is committed to providing its services to the
   customers. The mission statement states the objectives and responsibilities that the organization
   is willing to undertake. For instance, the mission statement of Apple dictates that it is within the
   responsibility of the company to ensure its customers receive the best product that will uplift

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their utility. The strategy provides a brief overview of the operations that the organization will be
undertaking for them to realize their goals and objectives. The policy of Apple company
stipulates that their goal is to maximize their revenue, and they will achieve that by increasing
their sales. The structure shows the governance and how it affects the operations in the company.
The structure of Apple only has the president and heads of departments. That indicated that there
is inclusivity as the problems can be directly addressed to the president without a long queue of
hierarchy.  
The strategy is positive as it incorporates all the levels of operation. The plan competes at
various levels to maintain the competitive advantage of their products. The approach is essential
to integrate aspects of high-quality products that are affordable and the timely delivery of
products to increase customer satisfaction. The organizational structure has a positive effect on
tight control possessed by the president of the company in managing all the aspects of the
company. Also, the structure incorporates the head of the departments, which is an essential
aspect as it assists in the division of labor and responsibilities. The mission is vital; it provides an
overview and a clear picture of what the organization is all about. The purpose has a positive
effect as it has included their services and products in the statement. The mission makes the
client know what they can receive from the company and if its suites their needs.
Long-Term and Short-Term Goals
Apple has identified several long-term goals, which include environmental
responsibilities and the leveraging ability for designing and developing. The ecological goal
focuses on making the company innovative (Macrotrend, n.d.). They aim at utilizing renewable
energy in their offices and stored. The leveraging ability goal is an ongoing goal to ensure the
company maintains a competitive advantage by offering superior innovation and integration in

APPLE’S FINANCIAL PERFORMANCE 5
all its products. Enhancing and expanding is one of the short-term goals of the company. The
company is investing more in research and development. The research department has proven
that the company is expanding on a short-term basis by increasing their revenue in each fiscal
year. 
Through the use of effective marketing channels, Apple company can effectively improve
on their strategy. Sales require a lot of investment in marketing. They need to keep their market
and nature of their products simple and make sure they have designed a much better customer
experience. They also need to build a community for the users of their products. The
organization of Apple organization is active, but it can be improved through adding subordinated
under the CEO. The president may be facing difficulties in overseeing the activities in all the
departments. Some of the departments should be combined for effectiveness and efficiency in
their level of operation (Macrotrend, n.d.). The mission statement of the company can be
improved through including both their short term and long-term goal. Such incorporation will
ensure that its customers can resonate with the contributions that the organization has to the
community at large.

Ratio Analysis

P/E Ratio
At the moment, the share price for Apple id $284.43. The earnings per share for the last
trailing twelve months was $12.66. Thus, the P/E ratio for Apple is 22.47. competitive
companies are selected from companies that operate in the same industry as Apple. Some of the
competing companies for Apple include Samsung Electronics and Midea Group Corporation
Limited. The P/E ratio for Samsung Electronics is 15.52, while that of the Midea group
corporation is 14.24.

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Date Stock Price TTM Net EPS PE Ratio
2020/4/20 279.93 12.66 21.87
2019/12/31 293.65 11.85 23.20
2019/9/30 223.97 11.73 18.90
2019/6/30 197.92 11.89 16.87
2019/3/31 189.95 12.16 15.98
2018/12/31 157.07 11.87 12.92
2018/9/30 223.99 11.03 18.87
2018/6/30 183.03 10.36 16.59
2018/3/31 165.26 9.73 15.95
2017/12/31 166.02 9.20 17.06
2017/9/30 150.65 8.80 16.38
2017/6/30 140.21 8.85 15.95

Current Ratio
Apple’s current ratio for the last twelve months was 1.6x. For the year ended September
2015 and 2019, the average current ratio for the company was 1.3x (Macrotrend, n.d.). The
company has been operating with a median current ratio of 1.3x for the last five years. The ration
picked in December 2019 at 1.6x, with the lowest ratio in 2015 at 1.1x.

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2010201120122013201420152016201720182019
0
0.5
1
1.5
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2.5

Current Ratio

YearColumn2Column1

Recommendation
The P/E ratio does not put the balance sheet into consideration. When the P/E ratio is
high, the buyers of the shares in the company will have to pay a much higher price for each of $1
that the company has managed to earn in the last one year. The situation is not suitable for Apple
Inc. but gives the buyers assurance and optimistic perception of the future. The P/E is a vital
ratio in showing whether the market has a high or a low expectation of the company. From the
data, the P/E ratio for Apple company is lower than the average 19.9 in the technological
industry classification (Jensen, 2019). Thus, the P/E ratio implies that the market participants
think that the company will not fare well when compared to its peers in the same industry. The
majority of investors prefer to purchase shares when the market is more pessimistic about the
prospects of the company.
Generally, the rates of earning growth have several implications of the P/E multiple. The
earnings growth implies that future earnings will be higher. That means that even if the P/E ratio

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is high, it will decline over time if the price of the shares remains constant and flat. Therefore,
when the P/E ratio is less, more buyers are attracted to push the cost of the shares higher.
Reflection
The earnings per share for Apple company has increased by 6.6% form the year 2019.
The earnings per share have also been growing by 14% in each consecutive year (Jensen, 2019).
The P/E puts into consideration that market capitalization. Thus, the ratio will not reflect on the
benefits of the cash of the disadvantages of the debt. In theory, a company is in a position to
lower the P/E ratio by using the money and debt to invest in the growth. The spending might be
good or bad for the company, but the main aim is to look at the debt so as understand the nature
of the company’s P/E ratio. The net debt for Apple is 1.5% of its market capitalization. Thus,
there is a high chance that the market will allocate the company a much higher P/E ratio if there
was net cash. But it is less likely that the lower level of the net borrowing will have a significant
implication on the P/E multiple. The trading P/E ratio for Apple company is 17.7, and that is
close to that of the U.S. market, which is 17.4 (Finkle and Mallin, 2010). When the modest EPS
growth for last year is put into consideration, the market will think the increase will be
sustainable. The investors will have a chance when the expectation of the market is not correct. If
the reality of the company is much good than it expects, it is possible to buy shares and hold
them for a long time.

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References

Finkle, T. A., & Mallin, M. L. (2010). Steve Jobs and Apple, Inc. Journal of the International
Academy for Case Studies, 16(7), 31.
Jensen, H. B. (2019). Exploring the Financial and Accounting Reporting Standards and
Principles under US GAAP (Doctoral dissertation, The University of Mississippi).
Macrotrend (n.d.). Apple Financial Ratios for Analysis 2005-2020 | AAPL. Retrieved from
https://www.macrotrends.net/stocks/charts/AAPL/apple/financial-ratios