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Financial Reports Understanding Financial Reports I Am Essay

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Financial Reports Understanding Financial Reports

I am choosing to analyze Apple Inc., a publicly held company since 1980. The homepage is at http://www.apple.com. I am interested in Apple for many reasons, firstly because it is one of the most successful and largest companies in the entire world, and has reshaped not only the tech industry, but has reshaped the way that we conduct business, from the personal computer of the 1970s to the music revolution with iTunes and the iPod, to modern day smart phones and iPads that provide an enormous amount of information in the palms of our hands. I expect to benefit from the analysis of Apple Inc. because the business has been documented extensively, and therefore I can retrieve expert opinions on Apple's history and future from the most professional sources. Also,...

Apple's Profit Margin was at 25.19% 2Q 2012, which is near the 2Q 2012 number of 25.58%. Apple's Asset Utilization Rate for 2Q 2012 was 1.066, which means Apple was gaining more than $1 for every $1 of Asset it owns, which is an extremely good position to be in. Apple's Asset Utilization Rate for 2Q 2011 was 1.103, even better than the 2012 rate. Apple's Competitive Financial Position was -55Million for 2Q 2012, however for 1Q 2012 it had positive 310 Million, suggesting that Apple decided to…

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Apple's Return on Assets for last quarter was 29.70%, a change of plus two percent from 2011. Apple's Profit Margin was at 25.19% 2Q 2012, which is near the 2Q 2012 number of 25.58%. Apple's Asset Utilization Rate for 2Q 2012 was 1.066, which means Apple was gaining more than $1 for every $1 of Asset it owns, which is an extremely good position to be in. Apple's Asset Utilization Rate for 2Q 2011 was 1.103, even better than the 2012 rate. Apple's Competitive Financial Position was -55Million for 2Q 2012, however for 1Q 2012 it had positive 310 Million, suggesting that Apple decided to spend a lot of cash during the last quarter, which is not necessarily a bad thing, but is strange for Apple since they have had positive cash flow each quarter for the last 5 years. Apple is very unique in that they have very little debt. This means that Apple's Free Cash Flow is unusually high, remaining at 7.945 billion for 2Q 2012. Apple has more cash on hand than any company in the world, and therefore its Relative Cash Position is higher than all of its competitors. Apple has been using its cash for growth for several years in a row, with its Receipt and Use of Cash at -12.31 billion.

Google is Apple's primary competitor in the mobile market, which is both Apple and Google's largest sectors, despite the fact that Google's core service is search and Apple's is technology. Google's Return on Assets was 15.02% in 2Q 2012, less than Apple. Google's Profit Margin was at 22.80% for 2Q 2012, lower than Apple, but still an extremely high profit margin by anyone's standards. Google's Asset Utilization Rate is at 0.5564, much lower than Apples, which was over 1.0. Still, 0.55% does not mean that Google is necessarily doing worse than Apple, but it is using its resources less efficiently. Google's Cash Flow was at 639 million for 2Q 2012, a huge level, although it was even higher in 1Q 2012, at 1.23 billion.

Both Apple and Google have extremely successful businesses, and despite being competitors in the mobile sector, they still work together on some projects and have kept a good relationship. Apple is in a better position right now due to its excellent efficiency rates and enormous cash on hand. Google is not far behind, however, and still gains a tremendous amount of money from its search formula.
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