Shareholder analysis is used by organizations to research individuals and groups who own stock and the different economic conditions impacting the organization. The discussion will be on the other economic conditions influencing a company's performance: the government, political, currency, environmental, and global economics.
Government
The government may impact company performance by modifying how firms operate through adopting legislation or changing their spending and taxation. For instance, when the government increase expenditure or reduce tax, there will be an increasing demand in the economy, resulting in increased production and employment in companies (Zysman, 2018). Governments can also enact a law to protect customers and workers, limiting enterprises' techniques of expansion.
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Political
Political factor has many effects on businesses since it can introduce a potential risk and result in significant economic damage because it can influence economic outcomes and impact government policies at any levels (Benn et al., 2014). Political factor is the least predictable influence on companies' financial conditions, threatening the economy. There is diversity in decisions made by the bureaucracy leading to political instability and change in organization regulations.
Currency
Currency adjustments affect the use of flexible exchange rate by most economies. Monetary policy and loan rate variations influence trade rates' strength or weakness, determining the changing standard of currency since the value of a dollar fluctuating every time has a significant influence on market exchange (Zysman, 2018). For instance, the currency supply and flow, inflation and lending charges can adversely influence the production and distribution of companies.
Environmental
The environment provides economic resources and serves as a drain for pollutants and trash to companies. Raw materials from the environment are necessary inputs for many industries and can prevent production when unavailable. Manufacturing and distribution of end products like plastics cause pollution and other environmental problems (Benn et al., 2014). The polluted environment affects economic development and well-being by reducing the quantity and quality of resources available or having negative health consequences to everyone and could reduce labour, therefore, reducing productivity and low income for organizations. Environmental policies also have the potential to reduce the harmful effects of the economy on the environment.
Global Economics
Global economics reduces manufacturing costs due to advanced technology, which lessens materials and labour, allowing businesses to provide products to customers cheaper. The average price of commodities is a critical factor in purchasing a product, impacting the economy as consumers can always choose from a more extensive selection of products (Goodstein et al., 2020). The global economy has given individuals better living standards throughout the world. Still, not all of its benefits are beneficial to everyone as some countries continue to eliminate human labour.
Compare market conditions with the company’s performance for the year you are researching. Conclude how the market conditions that year influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected
In 2019, Apple had a 56.62 per cent global market share, followed by Samsung with 24.06 per cent and Amazon with 5.44 per cent. Despite Apple's dominance in the sector, Amazon's substantial expansion in the second quarter of 2019 was seen as a great advantage (Owen, 2019). It's important to note that other industry parts have recently evolved, placing pressure on Apple to stay ahead of the pack. The pandemic impacted Apple's sales in early 2020, but the business increased by 13.5 per cent in the second quarter and 11.8 per cent in the last quarter. Apple interest rate for the past twelve months is 2.1. In 2019 Apple interest rate reached 3.2 per cent, and in 2020 analysis Apple's interest rate fell to -22.4 per cent from the previous interest rate of 2.5 per cent. The market value of Apple product in 2019 was at its peak; this showed that investors during this time had a great return, and in 2020 it had the most significant decrease; therefore, losses were obtained by investors and the cost of borrowing was minimized. Federal Reserve Bank expenditure and tax rates determine Apple Corporation tax deficits, whereas financial authorities influence their loan availability and pricing; therefore, Apple makes business decisions based on existing and predicted market stability.
Analyze year-over-year performance from the prior year and the current year analyzing. Consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity in your conclusions.
In the past twelve months, Apple has a trailing PE ratio of 19.74X, compared to 24.7x in 2019 (Apple Inc, 2021). The trailing PE ratio compares a company's stock price to its operating profits over the previous year; it is a valuable tool for standardizing and comparing relative share prices across timeframes in organizations. It shows that the Apple market seemed to have gone down; this could be due to the pandemic . Apple's Forward PE Ratio is currently at 23.79. The forward PE ratio is often used to estimate a company's value concerning its earnings; for the past twelve months, which ended in March 2021, Apple's share earnings per individual were deferred to $4.46 (Apple Inc, 2021). The forward PE ratio enables investors to measure Apple Corporation stock market; however, it's not accurate because it ignores liquidity and loans and is focused on historical performance rather than future predictions.
Apple Price to Book ratio is at 28.35, which indicates that the company stock has shifted since 2020 with some additional product costs to the company's book value. Apple's economic value reached $345,606 million in the quarter that ended in March 2021, and its net income was $ 94 520 in the same quarter; therefore, the yearly return on assets for the quarter ending in March 2021 was 27.35 per cent. From 17.73% in 2020 (Apple Inc, 2021). The ROA assesses Apple’s ability to generate profits from its shareholders' capital and debts; it also indicates how effectively Apple utilizes its assets to create profits. From 2016 to 2020, Apple's return on equity value reached a midpoint of 50.5 per cent (Apple Inc, 2021). Apple earned a median profit from the primary value of 49.4 per cent from those financial years. Apple's return on equity peaked at 103.4 per cent in March 2021; the high ROE does not always imply improved financial performance; it could mean high debt levels for Apple company.
References
Apple Inc. (AAPL) valuation MEASURES & financial statistics. (2021). Retrieved June 13, 2021, from https://finance.yahoo.com/quote/AAPL/key-statistics/
Benn, S., Edwards, M., & Williams, T. (2014). Organizational change for corporate
sustainability . Routledge.
Goodstein, E. S., & Polasky, S. (2020). Economics and the Environment . John Wiley & Sons.
Owen, M. (2019). HowandWhat.net. (2021, January 24). Competitors of Apple (COMPETITOR analysis of Apple). Retrieved June 12, 2021, from https://howandwhat.net/competitors-apple/
Zysman, J. (2018). Governments, markets, and growth . Cornell University Press.
