- Apple’s success
Apple has a market capitalization of $ 557 million dollars. Apple is scheduled to make an announcement on their 4th quarter earnings and considering the hype surrounding the company, the report is expected to be a huge success. The California based company earlier on released their 3rd quarter financial results for the 2013 financial year. In the article, Apple earned quarterly revenue of $ 35.3 billion and a net profit of $ 6.9 billion translating into an earnings of $ 7.47 per each diluted share of the business (Scott, 2013). In the same quarter last year, the firm made $ 35 billion in sales, $ 8.8 in net profits and $9.32 earning per each diluted share.
This year’s gross margin for the quarter was 36.9% compared to last year’s 42.8%. The firm’s overseas sales made a 57% of the sales made in this year’s third quarter.
The firm sold about 31.2 million iPhones which was a record for the third quarter considering the fact that last year’s third quarter sales were 26 million. Apple made an iPad sales volume of 14.6 million compared to last year’s 17 million in 2012’s third fiscal quarter. The number of Macs sold in this quarter slightly declined to 3.8 million pieces compared to last year’s sale of 4 billion in the same third quarter. The company’s board made a declaration to issue cash dividends of $ 3.05 per share in the firm’s common stock that was to take effect on august 15 this year (Apple Inc, 2013).
The company’s CEO Tim Cook said that the firm was proud of the June’s quarter achievements primarily due to the remarkable sales of 31 million the company made within the quarter (Scott, 2013). He added that the fast growth in iTunes, software and other services revenues contributed in a significant way towards achieving this amazing sales level. The company forecasts a successful fourth quarter due to the expected market releases of IOS 7 and OS X mavericks. In the third quarter, the firm generated $ 7.8 billion in cash flow from its operations and managed to return 18.8 billion to its stakeholders as dividends and share repurchases.
Katy Huberty, a Morgan Stanley analyst rates Apple as overweight with the firm having a $ 540 price target. Huberty says that investors should expect high numbers in the fourth quarter, especially due to the increasing popularity of the I phone 5s. About 34.5 million phones are expected to be sold in the fourth quarter alone (Scott, 2013). . This would allow the firm to earn at least $ 8 per share, thus creating a gross margin of 38% and huge revenue of $ 37 billion. The street Quant has listed Apple as part of the stocks that have the potential to triple in the next one year making them a good stock to buy bet. After announcing its 9 million iPhone sale, Apple expressed their optimism that the company’s revenue figures in the last quarter will be between the ranges of $ 34 to 37 billion. The company expects its gross margins to shoot up by 36-37%. In the last quarter, Apple Inc made a sale of 47.8 million iPhones, and if it hits the 55 million mark, this will be a 15% year-year growth for the company. Hubert anticipates that the iPhone 5s which has remarkable margins will account for about 45% of all shipments by the company. She says that demand for this particular product has been overwhelming. In summary, Apple Inc has made remarkable trading successes in the last few quarters with the future looking even brighter for them.
Q2 a balance sheet
2 a. 1The press release has a balance sheet attached.
2 The word balance sheet appears on the title
2 b. Company’s income statement:
- B. I An income statement is attached to press release
II The income statement is dubbed consolidated statement of operations.
III I was able to recognize the financial statement from its contents. For instance, it starts with the firm’s net sales and ends with the net income after tax.
IV. The income statement is precise to the dollar since the total revenue figure minus the total expenditure tally with the figure I have calculated from my calculator (Sutherland, 2012).
- Confirming the accounting equations
In the practice of accounts, the relationship between assets, liabilities, and equities can be expressed in formula form thus creating what people call the accounting equation. The said equation uses algebra to represent the accounting components. For the balance sheet the accounting equation is
A = l + c
A stands for assets; l for liabilities, and C represents the equity. The equation states that equity equals the value of a company’s assets less the liability against the company. The equation also states that the value of a company’s assets is equal to the company’s liabilities plus the firm’s equity value balance sheet has two parts: one part indicates the value of assets the company has and the other indicate the value of liabilities and equity or rather what the company owes. As for the income statement, the formula of arriving at the profit figure is as follows
P = I – E
Where p stands for profit the company has made at any given period whether yearly or quarterly, I represent the firm’s incomes which comprise the gross margin and other incomes the firm may have earned. Lastly, E stands for the company’s expenditures which are divided into different categories such as administrative, operating expenditure, staff welfare, and general expenditure among others.
For our business, Apple, the balance sheet equation has agreed since the assets side tallies with the liability and equity side.
A = L+C
The firm’s asset value equals Current assets + Current Liabilities
68,219 + 131,637 = 199,856
The firm’s liabilities amount to a figure of 76,502 which is a total of short term liabilities i.e the firm’s short term financial obligation and the long term liabilities. The short term liabilities are reported at a figure of 36,319 while the company’s long term obligation stand at 40, 183. The totals of the two should give us a figure of 76, 502 i.e.
26,319 + 40183 = 76,502. Using a calculator, the figures seem to tally with the excel figures and thus the accounting equation in the balance sheet balances out. Using an excel extraction posted below it is possible to confirm if the accounting equation is in balance.
