Microsoft vs Apple financial ratios Essay

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Apple Incorporated vs. Microsoft Corporation
A Financial Analysis of Competitors
Alex Trenchovska
Columbia College

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Apple Incorporated vs. Microsoft Corporation
A Financial Analysis of Competitors

In modern society, electronics are used on a daily basis. Virtually everyone has a smartphone that they carry with them at all times, and most individuals have a personal computer for home use. In this electronic age, it is primarily two companies that are competing over the market share in order to be recognized as the best performing tech company: Apple Incorporated and Microsoft Corporation. Most individuals, when asked, have strong preferences towards either Apple or Microsoft products
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Microsoft Corporation’s profitability ratios: Figure 2. From 2012 to 2013, Microsoft Corporations profit margin increased roughly 5%, although there was a slight decrease from 2013 to 2014, the profit margin still increased nearly 2.5% overall. Their return on assets experienced a decrease of over 1% due to a sizeable increase in inventory on the books, similar to Apple Incorporated. Microsoft Corporation’s return on equity also decreased by nearly 1% between 2012 and 2014 due to sizeable increases in the amount of equity held in the company. Which company is performing better based on profitability ratios? Based on a comparison of the profitability ratios between Apple Incorporated and Microsoft Corporation, Microsoft is performing better than Apple. Microsoft’s profit margin is higher than Apple’s and did not experience the decrease that apple did. While Microsoft does have lower returns on assets and equity than Apple, Microsoft was more stable between 2012 and 2014, and did not suffer the same decreases in these ratios that Apple did. Since Microsoft increased their profit margin and was a more stable company, I would argue that it is the better company.
Asset Utilization Ratios Asset utilization ratios measure how quickly a company is able to turn over their receivables, inventory, and other assets. The faster the company is able to turn over their assets, the more efficiently the company is running because they
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