Apple Inc.is a company in the US that manufactures and produces computerized technological devices. Such devices include iPhones, iPods, Mac desktop computers and laptops, watches, among other smart devices. It is also responsible for the design of operating systems like iOS and Mac OS. Apple provides services and software for computing purposes. They give iCloud for storage of data. They distribute their products and services through various platforms like retail shops and websites. They ensure they reach the largest market by using online stores and distributing their retail stores across the world. They also promote a direct sale strategy for their products, not excepting wholesale methods. Apple Inc. is headquartered in Cupertino, California.
SIC Code: Examining budget summaries for Apple, the most prominent hardware organization in the United States, 3571 is the SIC code that identifies it. This class includes retail chains, assortment stores, and various general product outlets.
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Analysis of the industry; In doing the comparison between Apple and the other industries related to it, I collected the sections of both industries that involved their financial information for analysis. With this data, it would be easier to illustrate the performance of Apple Inc. in comparison to these industries. They would be easy to comprehend since the competitiveness of the two companies can be matched side by side ( Babkin, Lipatnikov, & Muraveva, 2015) .
The current ratio determines the ability of a company to clear its current liabilities by compensating with the cash they can receive from trading off their assets. From the chart, Apple Inc. will face more difficulties in clearing their liabilities when compared to the industry. It seems Apple cannot easily exchange their assets for cash to make up for the current liabilities they face. Therefore, in this situation, the solvency of Apple is worse than its fellow industry (Jacobs, 2015).
The two companies are the same in efficiency to their creditors. They have similar time interest earned ratios. This means they have the same capability when it comes to paying yearly charges on interests. Debt ratio is one that indicates the amount that the company is in owe to other firms about its equity. For the best balance in a company, the ratio must always not be greater than 1. The value 0.43 of Apple Inc. implies it runs its operations by greater finance from borrowed sums as compared to the other industry (Lewis, 2014). However, in this case, the efficiency of Apple Inc. will be lower than the other company. Similarly, Apple Inc. will be the less efficient company when it comes to turnover from accounts receivable. The proportion from the figure regarding this ratio implies that Apple Inc. has less collection from accounts when likened with its peers.
When it comes to the profitability of the two companies, Apple will do greater than its peer. The gross profit margin ratio is obtained by gross profit by the total of revenues. The values for Apple Inc. are higher at 38.68 when compared to 26.7 for the similar industry. Return on assets indicates that Apple is profiting much from other investments, unlike its peer company that has less to count on from other investments not in its regular operations ( Nwogugu, 2015) .
The asset turnover ratio can measure liquidity. When the dividend of total revenue and total asset is calculated, it becomes the asset turnover ratio. It depicts a company's gain from its other investments. The two companies are doing well in this section. They are the same in their abilities to utilize the assets.
Apple Inc. SIC 3571
| Financial Ratios | Apple | Peer Industry |
| Current Ratio |
0.9 |
1 |
| Total Debt to Equity Ratio |
0.43 |
0.34 |
| Gross Profit Margin |
38.68 |
26.7 |
| Times Interest earned |
11.4 |
11.4 |
| Accounts receivable Turnover |
77.7 |
85.2 |
| Inventory Turnover |
7.9 |
7.8 |
| Return on Sales |
3.5 |
3.23 |
| Asset Turnover |
2.4 |
2.4 |
| Return on Assets |
8.1 |
7.7 |
| Financial Leverage |
0.54 |
0.51 |
References
Babkin, A. V., Lipatnikov, V. S., & Muraveva, S. V. (2015). Assessing the impact of innovation strategies and R&D costs on the performance of IT companies. Procedia-Social and Behavioral Sciences , 207 , 749-758.
Jacobs, H. Apple Inc. Case Study.
Lewis, T. G. (2014). Booms. In Book of Extremes (pp. 51-67). Copernicus, Cham.
Macrotrends (August 2018) “Apple Financial Ratios for Analysis 2005-2019 | AAPL” macrotrends. Retrieved on 15 June 2019 from https://www.macrotrends.net/stocks/charts/AAPL/apple/financial-ratios
Nwogugu, M. C. (2015). The Case Of Apple, Inc., and Fintech: Managerial Psychology, Corporate Governance and Business Processes. Corporate Governance and Business Processes .
