1) Risk Factors (apple.com)
1. Negative effect of the global and regional economic conditions.
2. Possibility of ineffective competition in the global markets which are highly competitive and subject to rapid changes in technologies.
3. The Company must successfully manage frequent product introductions and transitions to remain competitive and stimulate customer demand.
4. The performance of distributors, carriers and other resellers also play an important role and have impact on the general performance of the company.
5. Substantial inventory and other asset risk as well as purchase commitment cancellation risk.
6. Company’s ability to obtain components in the right quantities influences future results.
7. One of the risks is dependence upon component and product manufacturing in addition to logistical services provided by outsourcing partners, many of whom are located outside of the U.S.
8. Apple can come across quality problems that can lead to reduced sales and operating margin and also the Company’s reputation can be influenced.
9. The Company depends on access to third-party digital content, which may not be available to the Company on commercially reasonable terms or at all.
10. Partly, support from third-party software developers can be a great risk.
11. Third-party intellectual property, which may not be accessible to the Company on commercially rationale timeframe or at all, can become a problem for Apple.
12. Unpleasant results of judicial proceedings can effect the performance of Apple.
13. The Company is under laws and rules through all over the world, affecting which one can enlarge the Company’s costs and individually or in the aggregate adversely affect the Company’s business.
14. International operations have a great impact on the Company’s performance.
15. Numerous risks and uncertainties can influence the Company’s Retail segment as it needs investment.
16. When the company invests in new business strategies and acquisitions, this could disrupt the Company’s ongoing business and new risks can occur, many of which were not originally contemplated.
17. Information technology system failures or network disruptions could become a risk for the reputation of the Company and its business.
18. There may be breaches of the Company’s information technology systems that materially damage business partner and customer relationships, curtail or otherwise adversely impact access to online stores and services, or subject the Company to significant reputational, financial, legal and operational consequences.
19. U.S. and international laws, rules, policies and different obligations regarding data protection can influence the Company’s performance.
20. The Company’s performance is influenced by the continued service and accessibility of main staff.
21. The Company’s business may be impacted by political conflicts, warfare, natural calamities and other work brakes.
22. The Company expects its quarterly revenue and operating results to fluctuate.
23. Volatility of the stock price.
24. Changes in the value of the U.S. dollar versus local currencies can affect Apple’s financial performance.
25. The Company is exposed to credit risk and fluctuations in the market values of its investment portfolio.
26. The Company is exposed to credit risk on its trade accounts receivable, vendor non-trade receivables and prepayments related to long-term supply agreements, and this risk is heightened during periods when economic conditions worsen.
27. Tax rates can change or new legislation can be adopted. These factors can be a great risk for the Company’s performance.
2)
(samsung.com, apple.com)
3) Current Ratio = Total Current Assets / Total Current Liabilities
Apple: current ratio = 68,531/63,448 = 1,08
Samsung: current ratio = 115,146/52,013 = 2,21
D/E = Total Liabilities / (Total Assets - Total Liabilities)
Apple: D/E = 120,292/(231,839 - 120,292) = 1,08
Samsung: D/E = 62,334/(230,422 - 62,334) = 0,37
Return on Assets Ratio = Net income/Average Total Assets
Apple: Return on Assets Ratio = 39,510/231,839 = 0,17
Samsung: Return on Assets Ratio = 23,08/230,422 = 0,1
Return on Equity Ratio = Net income/Shareholder’s Equity
Apple: Return on Equity Ratio = 39,510/111,547 = 0,35
Samsung: Return on Equity Ratio = 23,08/168,088 = 0,14
I believe that Apple’s performance is better as such ratios as return on assets and return on equity are higher.
Let us have a closer look at these two ratios. First of all, to calculate Return on Equity Ratio, we took Net income and divided it by Shareholder’s Equity. We arrived at a return on equity of 35% for Apple and 14% for Samsung. These numbers alone tell us that Apple generated a 35% profit on every dollar that was invested by shareholders. What concerns Samsung, it generated 14% profit on every dollar invested. A lot of professional investors search for a Ratio on Equity of 15% or more. Taking this standard in consideration, Apple’s performance is more attractive for investors.
Works cited
“Samsung Electronics. Annual report.” Web. December 2014. Retrieved from http://www.samsung.com/common/aboutsamsung/download/companyreports/2014_E.pdf . Print.
“Form 10-K.” Web. September 2014. Retrived from http://investor.apple.com/secfiling.cfm?filingid=1193125-14-383437 . [UNITED STATES SECURITIES AND EXCHANGE COMMISSION]. Print.
