In this chapter, we learned the basic accounting principles and analysis techniques. These allow us to be able to read and understand company’s financial status through the key statements such as the balance sheet, the Income statement, statement of cash flows, as well as the shareholder’s equity statement. With applying these knowledge and theories onto Apple’s case, I observe the following facts and trend from Apple’s Q3 report:
(1) From the Income statement, Apple’s business financial status is in an excellent condition. Comparing to the Q3 in the previous year, its total revenue increase by 82%. Its total revenue reaches the record high up to $28.571 billions.
(2) Within the fiscal year, the revenue in the Q3 has a 16% increases against previous quarter Q2.
(3) Although the biggest revenue came from the market in the US, the Asian Pacific market growth rapidly in a speed faster than any other areas up to 247%.
(4) In the US and European market, the products unit sale were increased not in an aggressive rate (9% in US, and 1% in Europe) comparing to the same quarter last year, but the revenues were significantly increased by 63% in US and 71% in Europe. This means the revenue in each product unit is largely boosted, which is different from most of the consumer electronic products with lowing sale price.
(5) Among different products, iPhone champions the major business income in terms of both products units and revenue. In this fiscal year, iPhone market is in a sharp increase phase on top of all other products. Its product units sold and revenue in this year increase by 142% and 150% respectively comparing to the last year. Therefore, it leads to a conclusion that Apple will continue taking iPhone and its service as the core products in their product portfolio.
(6) The report also shows that the iPad and its related products and service have soon become another money making product in this year and in the near future. This product sector gains the biggest increase in the past year on both the product units (183%) and the revenue(179%).
(7) Another major trend can be found from this report. We noticed that all the iPod products start to phase out from Apple’s product portfolio. Its sale volume and related revenue were quickly dropped down in -20% and -14% respectively. This also means that Apple has moved its product focus on more high-end high profit margin products such as iPhone and iPads etc..
(8) From Apple’s operation statement, we learn that Apple’s net income this year increases by nearly double (98.856%) from last year $9.705 billions to $19.299 billions.
(9) Apple’s balance sheet shows that the company’s total asset was significantly increases from $75.183 billions in last year up to $106.758 billions. While its liability changes from last year’s $27.392 billions to current one with $37.415 billions, leading to a liquidity ratio at 2.8533.
(10) Apple’s shareholder’s equity now is the same as the total company’s asset, which gives the company’s financial leverage at a value around 1.35. That means Apple company is operated in a very healthy and conservative financial status.
(11) Apple’s statement of cash flow shows the business financial transactions for operation and investment activities. With large amount of initial money in hand ($11.261 billions), in this fiscal year, Apple’s cash generation by operation activities get over doubled from last year’s $12.912 billions to $27.100 billions in this year. Its investment was also heavily increased almost three times comparing to the last year up to $27,283 billions.
(12) In overall statement, I agree with Apple on its accounting statement and its operation strategy. Although Apple is now in its peak time from business point of view, there are many challenges and threatens a head of them. With missing the genius leader like Steve Jobs, will Apple be able to maintain the momentum and creativity? That is the question everybody is asking. Facing strong competition from Samsung, HTC etc. on the smart phones, many brand names on the tablets, Apple will have a very tough battle a head of them. In my view, Apple’s success is not purely due to its advanced technologies, or business execution, the success mostly come from the fact that Apple is leading the fashion and trend for the high tech electronic devices and products. If Apple in the post Steve era could not continue the leadership on this front, the pyramid could collapse. the success mostly come from the fact that Apple is leading the fashion and trend for the high tech electronic devices and products. If Apple in the post Steve era could not continue the leadership on this front, the pyramid could collapse.
Good analysis and seemed to use the info in the textbook well. Nicely done!
ReplyDelete