Research assignment framework and methodological considerations

Apple Computers

In looking at many of the key ratios for Apple Computers, it appears that the company is slowly improving from problems that they had dealt with in the past. For example, Morningstar.com shows Apple's return on equity as being 5.94% in 2004, while it was only 1.66% in 2003. In addition to this, Apple had a strong negative return on equity in 1996 and 1997, so the company is generally improving. It has not been an easy road, however, since the return on equity in 1998, 1999, and 2000 was around 20%. Looking at these figures indicates that Apple did very poorly for a time, then did very well, and then began to do poorly again - although not as poorly as in the past - before finally beginning to pull itself up from the slump that it was dealing with. The return on equity is not as high as it was during the prosperous years of the late 1990s, but the slower gains indicate a more stable company and possibly a more stable environment as well, which is very good for Apple to continue into the future.

There are many other ratios that can be considered, but the return on equity ratio appears to be the most significant, especially when compared with that of one of Apple's top competitors - Dell Computer Corporation. The same ratios for that company show that Dell Computer Corporation has had a steady climb, and that none of the years listed indicate that Dell has ever had difficulty with a negative return on equity. In 2004, Dell Computer Corporation's return on equity ratio was 47.62%. In 1996 and 1997, years during which Apple struggled, Dell's return on equity was 32.43% and 59.80%, respectively. In the late 1990s when Apple was doing well, Dell was doing better, with 1998, 1999, and 2000 ratios of 91.19%, 82.06%, and 46.53% for those years. Dell has had some ups and down, but it has never faced the negative return on equity issues that Apple has seen in previous years, and the return on equity numbers for Dell remain very strong - much stronger than those of Apple.

Even though Apple's ratios are improving, the improvement is slow and not nearly as strong as the numbers that Dell Computer Corporation is showing. This is, naturally, suspected to be rather troublesome for Apple, especially when it did so well late in the 1990s. It is unfortunate that it has fallen by the wayside to some degree, but one often sees advertisements for Dell and Gateway computers, and rarely sees them for Apple. The marketing may be the problem, but there could be other issues as well.