Apple Annual Report

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Apple Annual Report
Part 1: Apple’s goal is to design the best personal computers in the world as well as revolutionizing mobile phones and digital music through their iPhone and iPod products. Currently, Apple is now the top technology firm in the world. Apple became number one with a variety of attributes; with their strongest strengths being product development, ability to market, strong brand name and CEO Steve Jobs. Steve Jobs has done a charismatic job controlling Apple, but with his recent health issues and control freak demeanor, Jobs is also becoming a major weakness to Apple, along with their faulty products and continuously declining outsiders to create complementary hardware for Apple’s products. The major products Apple is manufacturing are their iPhones, iPods, Macbooks and iPads. Apple’s major products are mainly divided up into three segments: mobile phones, portable music players and portable computers. Apple is stock is traded through NASDAQ and their current auditor is the Ernst & Young LLP accounting firm. Apple is included in the technology industry along with other well known brands such as Microsoft or IBM. Even though there are such big names in the industry, Apple is able to stand out and still perform remarkably well. With the increase in technology, Apple’s new touch screen products like the iPhone or iPad are appealing yet simple. Apple’s products work quickly and have been dominating the smart phones and mp3s. With the economy steadily increasing, consumers will have more money to spend increasing the demand of technology products. And with Apple dominating the technology industry, Apple’s future looks to be a large, steady profit. In the industry as a whole, Apple is the number one firm, leading the industry with a market value of 324 billion. The technology industry is continuously creating new products or advancing old products such as Apple creating the iPad 2 and iPhone 5. Over the past three years, Apple’s profits have been on a steady increase being very profitable. One of the main reasons Apple has been this profitable was through their products and ability to market. There is a trend on their stocks to increase rapidly when a new product released, even through the recession. As of 2010, Apple’s net income was $14,013 and earnings per share were $15.41 basic and $15.15 diluted (NI and EPS found on page 46 of Apple’s annual report).

RoA

RoE

In the first quarter of the fiscal year 2010, Apple retrospectively adopted the FASB’s new accounting standards which would affect certain revenue recognition and primarily the sales of Apple’s iPhone and Apple TV. The new principles state that Apple must take in count all the revenue and product costs for the iPhone and Apple TV when the products are delivered to the customers. Other than that, Apple has not looked into adopting any new standards or acquisitions.
Part 2:

Between 2009 and 2010, the Apple’s sales revenue has increased around 52%, while the net accounts receivable has increased almost 64%. There is only a 12% difference between the revenue and accounts receivable, however, the allowance only increased almost 6%, nowhere near the other percent changes.
(In Millions)
End of 2009
End of 2010
Percent Change
COGS
$25,683
$39,541
53.61%
Inventory
$455
$1,051
130.99%

Since 2009, Apple’s Cost of Goods Sold increased almost 54% while their inventory increased nearly 131%. The inventory increased over double the COGS, having a large difference between each.
(In Millions)
End of 2008
End of 2009
End of 2010
Cash B.O.Y.
$9,352
$11,875
$5,263
Cash E.O.Y.
$11,875
$5,263
$11,261
Annual Operating Cash Flow
$9,596
$10,159
$18,595
Income Tax
$1,267
$2,997
$2,697
Net Income
$6,119
$8,235
$14,013

Over the course of three years, Apple’s cash flow and net income have been exponentially increasing. The cash flows have been sufficient enough to pay off their debt and tax very easily, with money left over to spend. As you can
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