Apple Financial Analysis

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FIN 305: Business Finance Spring 2016 Midterm Paper: Financial Analysis on Apple EXPECTATIONS & EVALUATIONS The objective of this paper is to thoroughly analyze Apple’s financial history and status for the last five years (2003 – 2007). Other important topics will be discussed which include: the company’s background, its assets, bonds, stocks, etc. To support the analysis, different relevant ratios will be calculated for Apple Inc in order to estimate the company’s current status, and also to compare Apple Inc. to the computer industry and one of its major competitors – Dell. The financial analysis of Apple is based on evaluating company and industry data from various sources. A trend analysis was performed using data for…show more content…
Slower sales (both for Apple and the industry as a whole), combined with a misunderstanding of the consumer market resulted in the first unprofitable quarter in three years. One factor in this decline was the G4 Cube, which sold poorly due primarily to its high price compared to Apple's other products. Another factor was Apple's decision to include DVD-ROM drives in their consumer and professional machines instead of CD-RW drives. As a result, Apple missed sales opportunities to customers who wanted to burn their own CDs. Apple's financial troubles continued throughout 2002. In October, it announced a quarterly loss of $45 million, due to weak PowerBook and PowerMac sales. In 2003, however, Apple began to recover, and to build for the future. Meanwhile, the iPod was beginning to take off. In April of 2003, Apple unveiled the iTunes Music Store, which would sell individual songs through the iTunes application, for 99 cents each. These songs could be played only on Macs or iPods, but Apple felt that by offering an easy to use, no-nonsense music service, it could make significant inroads to the digital music market. Apple did their homework: when announced, the iTunes Music Store already had the backing of the five major record labels, and a catalog of more than 200,000 songs. In October 2003, Apple released iTunes for Windows. In the first year alone, the iTunes
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