In the last decade, the IT business has spread in the world wide conventional demand and hence the competition between Apple Inc. (Apple) and Microsoft Corp. (Microsoft) has been heating up intensely. Both companies are employing innovative strategies and are introducing new technologies in order to increase their market share and take most out of their market place.
Stocks are generally examined and analysed using 2 major broad categories (Fundamental Analysis and Technical Analysis) that are permanently significant and vital for investment decisions. Fundamental analysis is usually performed by fundamental analysts that analyse the company characteristics, strategy, management and most importantly the financial Data. On the other hand, technical analysts analyse the stocks based on charts, volume and most importantly the price movement in the market.
In this report, a sophisticated Fundamental Analysis as well as Statistical analysis and contrasts will be performed on Microsoft and Apple’s in this report. Such Analysis includes but is not limited to Simple Return, Overall gains, Compound Annual Gains, Excess Returns, Correlations, Regressions, Etc.
Section A Fundamental Analysis (Financial Performance Analysis):
The objective of this section is to review and evaluate the performance and efficiency of Apple and Microsoft through attempting to measure profitability and other indicators using the data reflected in the annual financial statements for the period between FY2004 to FY2013.
Apple and Microsoft will together be analysed at the basic and fundamental financial level through calculating and exploring the ratios in addition to the historical and recent financial performance.
Section A.1 Microsoft Corporation – Fundamental Analysis
Section A.2 Apple Inc. – Fundamental Analysis
Section A.3 Basic Examining & Comparison on Microsoft and Apple’s Financial Performance for Fʏ2013
Section B Technical Analysis:
The objective of this section is to analyse the performance of volume, charts and most significantly the price movement in the market. The following technical analysis will be performedː
▪ Annual returns ▪ Overall Gain ▪ Compound Annual gains
▪ Monthly and Annual Excess returns ▪ Frequency Distribution ▪ Correlation
▪ Alpha, Beta & Adjusted ʀ-Square
Section B.1 Annual Returns
Annual returns are a percentage that is measured against the initial amount invested and demonstrates the investment’s performance over a certain period.
In section B.1, annual returns will be calculated for both stocks for the periods from 1986 till 2012. Diagram B.1.a is a yearly return line chart that illustrates the annual Return percentage for Apple and Microsoft stocks. Diagram B.1.a: Annual Stock Returns Section B.2 Overall Gains
In section B.2, Overall Gains will be calculated for both stocks for the periods from 1986 till 2012. Diagram B.2.a illustrates the overall gain on Microsoft stocks. As illustrated, Microsoft’s overall gain for the analysed period is 20446% ((26.71 – 0.13)/0.13)
Diagram B.2.a: Microsoft Overall Gain
Diagram B.2.b illustrates the overall gain on Apple stocks. As illustrated, Apple’s overall gain for the analysed period is 11519% ((532.17 – 4.58)/4.58)
Diagram B.2.b: Apple Overall Gain
Section B.3 Compound Annual Growth Rate (CAGR)
CAGR is not the actual return on stock but is an invented percentage that defines the rate at which stocks or any other investments would have grown if it grew at a stable rate. In section B.3, Compound Annual Growth Rate (CAGR) will be calculated for both stocks for the periods from