Apple Inc. (AAPL) Stock Price, Quote, History & News

Rationale 

Apple Inc. (AAPL) stock is the preferred stock for the client. Apple is an American company that designs, develops, and sells consumer-based products like phones, tablets, personal computers, desktops, and other accessories, to mention a few, which offers suitable investment due to multiple reasons. As a worldwide company, Apple sells its products through many avenues such as its Apple retail stores, e-commerce, website, and third-party-wholesalers. The decision to look at Apple was arrived due to its solid business model, and its longevity in delivering quality products to its consumers. The investor can easily comprehend Apple's business model, products and experience user-friendly quality products to be satisfied with their long-term investment in Apple. Secondly, Apple is an iconic global brand that resonates with very many users. Apple prides itself in bringing a few premium products to a select few, creating scarcity that raises demand making the company very profitable. Investing in such a luxurious brand offers a guaranteed product sale that makes profits for the shareholders, unlike investing in a startup with a significant market projection in company valuations. 

Furthermore, history favors companies with big premium brands to survive, even during testing times. For example, Apple still boasts of balance strength and confidence in its business outlook with a six percent rise in quarterly dividends and an incremental of $50 billion annual share repurchase run-rate despite being affected by the Covid-19( Fox, 2020 ). However, it may be argued that good performance in the past does not guarantee good performance in the future considering its predecessors like Motorola and Blackberry that were popular in the 2000s but failed. The main difference is that Apple has been able to keep pace with the quickly evolving technology world and consumer products, and the company shows no signs of stopping the momentum while the consumers also have no signs of reducing its admiration for the company (Sawayda, 2011) . Apple's investment has been in groundbreaking innovations, and technology has offered Apple an edge over the competition who go at it in a chaotic manner that confuses the consumers who cannot follow all the technical ins and outs. Apple is a large company that has established itself and delivers in its performances. 

Furthermore, investing also looks at the cap range. An investor is always encouraged to invest in large to mid-caps organizations while picking stocks. Apple fits the description of a large-cap. Meanwhile, small-cap organizations are promising in the early stages fueled by billion-dollar valuations; but lack the brand, longevity, and performance to back themselves as a long-term perspective company. Companies that pay dividends already prove themselves as profitable companies worth investing in because it is ubiquitous to find companies that meet the mentioned criteria but fail to pay dividends to investors. The summary for the rationale used in picking AAPL for the investor was based on the following criteria: Apple provides a solid business model and plan; it has established itself as a luxury brand that offers premium products to consumers backed by exception market performance and willingness to invest in future innovation. Meanwhile, it has a large-cap that pays dividends to investors standing out from other American companies and is worth pursuing in a client's portfolio. 

Denzel is a 38-year-old male who's employed and makes a stable income of about $120,000 annually from earnings and benefits. Denzel being a risk-taker, want to invest long-term in stocks for his retirement. Also, having ambitions of developing substantial estate, Denzel is looking for avenues to diversify his income sources. AAPL stocks look to be perfectly suited for his long-term future in having a stable and profitable stock. 

Ratio Analysis 

Ratio Analysis is the method of determining a company's financial ratios to indicate a company's performance shown by the 16 various types of ratios categorized into five ratio analysis. The five categories include liquidity ratio, leverage ratio, repayment capacity ratios, efficiency ratios, and profitable ratios (Khan, 2018). The ratio analysis was developed to identify, detail the strengths and weaknesses of a company to measure the success or failure of the financial institution. Apple's financial health will be assessed and evaluated using financial ratios to see if it fits the developed rationale as a worthy investment company for Denzel. Therefore, using financial ratios and the records of the three previous financial years, the company will be investigated to develop a report that will definitively give its financial health. 

Liquidity Ratios 

Liquidity ratio is a significant financial metric used to tell a debtor's ability to pay off their current debt obligations without raising or using external money. It focuses on short-term solvency if a company is liquidated at book value. In this case, liquid ratios tell Apple's ability to repay its debts and show its safety margin through the following three metrics: the current ratios, quick ratio, and cash ratio. 

Current ratio . The current ratio is calculated as current assets divided by current liability. Usually, the current ratio of any publicly-traded company should be above one. If a company's current ratio is below one, it means the company faces liquidity issues but does not mean the company faces an extreme crisis to secure capital (Palepu et al., 2020). Moreover, a company with a current ratio above 3 indicates the company is not utilizing its current assets efficiently or has mismanagement of working capital. The ideal ratio should range from 1.5 to 3 to indicate the working of a healthy company. Apple's current ratio has been steady and above one in the last six years ( Dybek, 2020 ). 

US $ in Millions	Sept 2020	Sept 2019	Sept 2018
Current Assets	143, 173	162, 819	131,339
Current Liability	105, 392	105,718	116,866
Current Ratio	1.36	1.54	1.12

In conclusion, Apple's current ratio weakened from 2019 to 2020 due to the Covid-19 pandemic but promised to bounce back when the economy fully reopens. Apple still proves a worthy company to invest in due to its ability to maintain above one and three, meaning they are appropriately utilizing their resources to make more money for the company and investors. 

Quick Ratio. The quick ratio is calculated as cash plus short-term marketable investment plus receivables divided by current liabilities. Ideally, a quick company ratio should be above one. If a company has a quick ratio below one, it indicates that a company will not pay off its short-term liabilities. Any quick ratio above one indicates the company can easily pay off its liabilities. For instance, Apple currently has a quick ratio of 1.22, meaning it has a liquid asset of $1.2 to cover each $1 of its present liabilities. Apple can meet its short-term obligations from the assessment apart from 2017, which was just below one ( Dybek, 2020 ). 

US $ in Millions	2020 Sep	2019 Sep	2018 Sep
Current Assets	38,106	48844	25,913
Current marketable securities	52,927	51,713	40,388
Accounts receivable, net	16,120	22,926	23,186
Vendor non-trade receivables	21,325	22,878	25, 908
Current Liabilities	105,392	105,718	116,866
Quick Ratio	1.22	1.39	0.99

Cash Ratio . The cash ratio is calculated as cash plus short-term marketable investments divided by current liabilities. The cash ratio is considered a conservative way for a company to pay its creditors and other obligations as it only sticks to cash and cash equivalents. It does not take other assets into account. A cash ratio equal to one shows the company has the cash or cash equivalents to pay off its short-term debt. A cash ratio of below one tells that the company has a deficit in cash and cash equivalent at hand to pay off its short-term liabilities (Palepu et al., 2020). A high cash ratio does not necessarily indicate a company's strength, especially if it is above the sector's cash ratios. Apple has always maintained steady cash and cash equivalents in their cash ratios that have been above one. Apple had been on the rise with their cash ratio apart from the disruption they experienced due to Covid-19. Moreover, most of its competitors have been in ths same range, indicating a healthy company. So far, Apple has provided a stable and reliable company worthy of Denzel's investment as they can meet their short-term liabilities ( Dybek, 2020 ). 

US $ in Millions	2020 Sept	2019 Sept	2018 Sept
Cash and cash equivalents	38016	48844	25913
Current marketable securities	52927	51713	40388
Current liabilities	105392	105718	116866
Cash ratio	0.86	0.95	0.57

Leverage Ratios 

Leverage ratio gauges a companies' long-term solvency. The leverage ratio looks at the capital the company is gathering in loans or assess its capability to meet its financial commitments. Companies can evaluate their ability to determine their equity against a loan to finance their operations. Knowing the debt magnitude, a company can devise repayment methods. If the debt is higher than equity financing, a company can leverage more, and the greater the risk investors face of losing money. Apple makes use of debt-assets ratios and debt-equity ratio. 

Debt Ratio . The debt ratio is the ratio of total debt to total assets. Normally, creditors prefer a company with a small debt ratio compared to companies with a larger debt ratio. A lower debt ratio means that companies have more equity to fund company operations and have more room for innovation, as for Apple (Palepu et al., 2020). A higher debt ratio spells doom for creditors. If a debt ratio is above one, the company has more debt than equity, but if a company has a debt ratio of below 0.5, it has more equity than debt. Apple stands with a debt ratio of 0.36 from $317 billion in total assets and 112.72 in total debt as of July 31, 2020. The technology sector typically has a small debt ratio due to the surplus they have from all the dealings that generate more money from the millions of users. Apple falls in that category as it can generate more income than the debt it holds. Creditors are more likely to lend the company to develop more products for its customers. Therefore, investors are also keen to lend their money and receive shares that pay dividends. The debt ratio had been steadily going down as it has accumulated more debt because of the pandemic that made sales drop, incurred from launch the new iPhones, iPads, MacBooks, among other things. 

US $ in Billions	2020 Sept	2019 Sept	2018 Sept
Total Debt	317	108.047	114.483
Total Assets	112.72	338.516	365.725
Total Debt Ratio	0.36	0.3192	0.313

Debt Equity . Debt equity is the ratio of total liabilities to total shareholder's equity. Debt equity is used to evaluate a company's financial leverage to measure the financing levels and figure if a company is operating on debt or equity. A high debt-equity ratio indicates that the company is taking a high risk by aggressively financing its growth using debt rather than equity (Palepu et al., 2020). The greater leverage, the more a company faces higher interest rates from creditors, making the investors exempt from profits. In layman's terms, debt-equity measures the shareholders' ability to finance the payment of all outstanding debts in case the company goes under. 

US $ in Billions	2020 Sept	2019 Sept	2018 Sept
Total Liabilities	258.55	248.03	258.58
Shareholders’ Equity	65.34	90.49	107.1
D/E Ratio	3.96	2.74	2.41

The past years three years have seen Apple increasingly use debt to finances its company operations. The analysis indicated an increase in debt-equity ratio from 2.41 to 2.71 but rose 1.22 points in 2020 due to the unforeseen pandemic. It typically means that for every 1 dollar a shareholder has invested, there is $3.96 debt funding. Ideally, the debt ratio should not exceed two, but only under special circumstances can it go beyond two. Apple is facing a higher debt-equity ratio brought on by the pandemic affecting the entire world. A high debt ratio in Apple's case shows how effective the application of debt capital has enabled Apple to leverage small funding from creditors, grow it, and repay later. 

Apple shows how it effectively takes a low financial risk despite having a high debt-equity ratio, and with the low debt ratio, the company has been able to finance its operations while steadily growing the company. The company is predicting to see more profits in the coming years. 

Stock Analysis 

The chart above shows Apple stocks over the past five years, which has shown a steady increase in stock prices. The past three years have seen much of the market steadily going bullish. The company felt the effects of Covid-19 during March when the country first had its early cases, and panic and uncertainty were setting in. However, with the much-anticipated release of these years' gargets, the stock prices bounced back, hitting new higher highs that were not reached pre-Covid. According to the analyst, the stock prices are expected to reach even higher highs as the company regains its lost revenue with the new payment plans developed to reach more consumers during these challenging times. 

An investor employs different ratios to determine a stock price's viability and evaluate whether it will be bullish or bearish and when to buy the stocks. Price per earnings ratio and market to book ratio are the most significant ratios an investor looks at before purchasing a company's stocks (Deden, 2020). 

Price per earnings ratio . P/E is used to predict stock prices and determine how much the market can pay for a specific stock. High P/E indicates that the investor will get higher returns in the form of higher dividends. Additionally, the higher stocks can also be interpreted as an overvalued stock that can go bearish and give an investor a better entry point when it goes bullish. Apple's stock process has been steadily rising from 42.76 to the current 122.52 a share. It has shown a bullish momentum had very little lower lows. 

	2020 Q4	2019 Q4	2018 Q4
Stock Price	122.72	66.89	44.87
Earnings per share	0.73	0.76	2.91
Price Earnings	37.68	18.90	19.02

Apple's P/E has consistently decreased for the past few years apart from this year's where the company might be overvalued with a 35.68 P/E, which is almost double the previous year's P/E ratios. A lower P/E is generally better compared to a higher P/E. It might be an area of concern since the company prices have spiked so high and might come back down to the point where they can steadily grow. 

The market-to-book ratio . The market-to-book ratio is commonly used to explore buyers' and sellers' perception of the market. The Market-to-book ratio is calculated by dividing a company's market cap by its book value. Apple's current market-to-book ratio has also been affected by the pandemic. Low book value ratios of under one are an indication of an undervalued company, and high ratios of above one is an indication of an overvalued stock. Therefore, according to the market to book ratio, Apple stocks are way over-valued. 

	2020	2019	2018
Share Price	122.72	66.89	44.87
Total Assets	112.72	338.516	365.725
Total Liabilities	258.55	248.03	258.58
Net Book Value	90.488	107.17	134.047
Share Issue	17.772	10.019	20.504
Net Book Value per Share	3.85	5.09	5.63
Market to Book Ratio	30.04	10.87	9.75

Risk Management 

Apple is not an exempted company from losses or downfall in the market. An investor should employ risk management to avoid significant losses should Apple go under or experience rough times, as seen from the analysis. Investing sounds good on paper but investing comes with some degree of risk, and an investor must evaluate the pros and cons to determine if the investment is worthwhile. On a scale of 1-10 of risk, one being very risky and ten being the least risky, Apple stands at seven on the scale. The risk score was arrived at from the analysis of the ratios and the stock analysis over the past three years, considering the pandemic that disrupted the world's economy. In that case, Apple stocks are an attractive stock venture to have in a portfolio. Meanwhile, the stock can experience difficulties, and risk management is imperative to protect investments. 

The following strategies can help alleviate the risk of investing in Apple: Diversified portfolio is imperative for any investor, which translates to having one's egg in several baskets. Investing in different assets or industries, for instance, having other shares, bonds, savings accounts, life insurance, or properties, is key to successful investing. Spreading investments across different asset classes reduces financial undoing if one sector experiences a rough patch. For example, Denzel wants to invest in the stock market while having sights on suitable properties and should also have a savings account or term life insurance if he is his family's primary breadwinner. 

The other strategy is knowing and understanding personal investment goals. Denzel wants to invest for retirement, which is a long-term investment. Having such a goal enables an individual to pick a safe stock that will grow steadily. Personal goals help determine an individual's risk appetite, and a beginner should always pick low-risk investments to become used to the market fluctuations and then raise the stakes after understanding the markets. Apple is worth Denzel's investment as it will grow steadily, and with their business model, he is likely to have substantial gains. 

The last strategy would require keeping a close eye on the investments made. Ideally, before buying any stocks, an investor investigates the stock's viability to give substantial returns. Monitoring after investing is imperative to understand how the market moves up and down. Investing and forgetting denies the investor the chance to pull out or add more money to make money on a particular stock. Monitoring the stocks helps investors remember their personal goals and encourages diversification to maximize profits. 

Recommendation 

A recommendation to Denzel from the above-compiled analysis shows a company that is well suited for his long-term investing for retirement. Apple is a company that boasts of its strong brand, which indicates that the company is using its resources adequately to create devices preferred by consumers. Aside from its strong financial muscle with a market cap of two billion-dollar, the company shows its companies efficiency in its operations and enjoys leadership that follows all the ethics. With the long-established roots in the global community, Apple products offer by far the best products laced with the most innovative, high-quality products and services, demonstrating integrity in every business interaction. Apple stock's performance guarantees a Denzel great returns over a long period to safeguard his retirement. While diversifying the investment portfolio, an investor should always consider Apple as a long-term investment option. 

References 

Dybek, M. (2020).  Apple Inc. (NASDAQ:AAPL) | Analysis of Liquidity Ratios (Quarterly) . Stock Analysis on Net; Stock Analysis on Net. https://www.stock-analysis-on.net/NASDAQ/Company/Apple-Inc/Ratios/Liquidity/Quarterly-Data#Current-Ratio 

Deden Tarmidi, Rachmat Pramukty, & Taufik Akbar. (2020, May 28).  Fundamental Analysis of Financial Ratios on Stock Prices . ResearchGate; unknown. https://www.researchgate.net/publication/341742266_Fundamental_Analysis_of_Financial_Ratios_on_Stock_Prices 

Fox, M. (2020, May).  JPMorgan calls Apple "a top pick" and gives 6 reasons why the stock can surge 20% (AAPL) . Markets.Businessinsider.com; markets.businessinsider.com. 

Khan, M. I., Riaz, S., & Iqbal, A. (2018). Re-Classification of Financial Ratio. In  International Conference on Business Sustainability and Innovation . 

Palepu, K. G., Healy, P. M., Wright, S., Bradbury, M., & Coulton, J. (2020).  Business analysis and valuation: Using financial statements . Cengage AU 

Sawayda, J. (2011). Apple Inc's ethical success and challenges.  Daniels Fund Ethics Initiative, University of New Mexico