Financial Analysis report on Apple and Intel corporations

Introduction of Apple and Intel corporations

                The aim of this paper is to provide deep insights into the financial performance of Apple and Intel corporations. Along with the financial analysis, the paper will be focused on the efficiency and profitability of the corporation. The profitability of the corporation matters a lot because if the corporation is generating profit not only it can expand its business in the future but also can meet the expenses effectively. The financial analysis not only provides the true picture to all its shareholders and management and top management compare the performance of the company with other companies and improve its weaknesses.

Background of Apple Inc.& Intel Corporation

                Apple Corporation is one of the world largest technological corporations. Apple is a world renowned corporation which has a global presence. It was established in the year 1976, April 1 and offers a wide range of different services and products which include iPhone, iPod, Apple TV, Apple Pay iTunes Stores etc. The company deals in consumer electronics & provides a huge variety of products in almost all over the world. The Headquarter of the Corporation is located in Cupertino California USA. According to the 2018 statistics the corporation has 500 retail stores.

                Intel Corporation is established in 1968 with the help of its founders Gordon Moore & Robert Noyce.  Theorganization is one of the most renowned organizations in technology industry. The organization has a global presence and it’s headquarter is located in Santa Clara USA. The products that organization provides to its customers include microprocessors, modems, motherboard chips and lot of other computer related equipment.

Financial Analysis of Apple Inc.& Intel Corporation
 
Deliverable 2: First Part of Apple Inc.& Intel Corporation 

Apple Inc.

 Intel Corporation

 Inventory turnover of Apple Inc.& Intel Corporation

                The inventory turnover ratio shows how much the organization has sold its stocks that are stored in the inventory. Through inventory turnover, one can see how fast the organization is selling the goods. High inventory turnover ratios indicate the huge amount of sales however low inventory turnover is the sign of weak sales and high amount of goods that are stored in the inventory. The Intel’s inventory turnover ratio is low which means that they companies sales are not much stronger and needs an increase. However the inventory turnover ratio of Apple Corporation is high which means that the corporation is generating significant amount of sales.

Fixed Asset Turnover

            The fixed asset turnover ratios show how much a corporation has generated sales by utilizing the fixed assets. The fixed asset turnover is calculated by dividing sales with fixed assets of the corporation. The fixed asset turnover ratio of the Apple indicates that they have utilized the assets efficiently however the fixed asset turnover ratio of Intel needs improvement.

Total Asset Turnover of Apple Inc.& Intel Corporation

The total asset turnover is measured by dividing sales with total assets. The total assets turnover indicates how effectively the company is utilizing assets for generating sales. The analysis indicates that both the company’s assets are underutilized.

Days Sales Outstanding (DSO) of Apple Inc.& Intel Corporation

            The days' sales outstanding ratios indicate how much time the company takes to collect the number of goods sold on the credit basis. The DSO ratio of Apple and Intel is lower which means that both companies are collecting the amount in a short period of time.

            How does  your  company  utilization  of  assets  stack  up  against  the  other  firm  in  your  group  companies?

If the Apple Corporation’s financial ratios are compared to its competitors such as Samsung, Google & Microsoft than it can be seen that the performance of Apple is relatively same to the other companies who are performing in the industry. The Efficiency and profitability ratios do not show a major difference. However, when the financial performance of Intel is compared with its competitor such as Amarelle than it can be seen that its performance is a bit better than Intel. It means the company has to take the step in order to improve their financial performance.

Efficiency Ratios of Apple Inc.& Intel Corporation

                The efficiency ratios of the company need improvement for further enhancing the profitability of the Apple Corporation (Pinder-Ayres, 2016). The efficiency ratios of the corporation indicate that the company needs to improve its efficiency. Currently, both the corporations Apple and Intel are not utilizing their assets appropriately. The low asset turnover indicates that the companies need to improve their asset utilization for generating sales. When the assets are utilized efficiently than companies able to increase their sales (Brooks, 2010).

2.2 Deliverable 2: Second Part

Apple Inc.

 Intel Corporation

            Solvency ratios are those ratios through which organization can measure the ability to meet the long term debts of the company. There are different types of solvency rations including debt ratio, time interest earned and debt to equity ratios. Debt to asset ratios of both companies including Apple Inc. and Intel Corporation move in the same direction.

Deliverable 2: Third Part

Apple Inc.

 Intel Corporation

 Profitability Ratios & Market Ratios of Apple Inc.& Intel Corporation

                The profitability ratios are used to measure the organization’s capability to generate profit comparative to its expenses. If the profitability ratios indicate the higher value as compared to the competitor’s profitability ratios, than, this demonstrates the good financial performance of an organization. The profitability ratios include Profit margin and Return on Asset (ROA). On other hands, market ratios are used to measure the share prices of the organization's stocks. Such ratios are mainly used by investors to know whether the prices of the stocks are underpriced or overpriced. The profitability ratios of Apple & Intel Corporation are computed to determine the profitability of the organizations.

Profit Margins of Apple Inc.& Intel Corporation

                The profit margin measures the organization's earnings at different cost levels. Gross margin evaluates how much sales an organization can mark up over the cost of goods sold. The net profit margin ratio evaluates the organization ability to generate profit after deducting the tax. The profitability ratios of both the corporations are good however they organization should improvement them so that the profitability can increase even further.

                The net profit margin indicates that the company’s profitability is good & does not need much improvement. The profitability of the companies suffers when companies are not utilizing their assets (The Economist, 2014). It is suggested that the companies should enhance its profitability even further which will help them to improve their financial performance. Currently, there is a little room for improvement and the company must focus on their profitability and efficiency (Horne & John M. Wachowicz, 2000).

Return on Asset of Apple Inc.& Intel Corporation

                Return on Asset indicates that how efficiently the organization is deploying its assets. The more the assets are increased in the organization the more company will able to generate the return. Both companies are generating high ROA but they must take steps so that companies can generate more returns on the assets in future especially Intel.

Earnings per Share of Apple Inc.& Intel Corporation

            Earnings per share (EPS) is a market ratio that indicates how much profit the company has allocated over the outstanding common stocks. It is also a measure of profitability as well.

Deliverable 2: Fourth Part of Apple Inc.& Intel Corporation 

Apple Inc.

 Intel Corporation

 DuPont Analysis along with Apple Inc. and Intel’s strengths and weaknesses

                Basically DuPont analysis is specifically used to assess any company’s return on equity by breaking it into three parts. In this method, assets are being measured at their gross book value instead of net book value.  As per Apple Inc. analysis, it is observed that Apple used its shareholder’s equity in an effective way in 2015 as compared to 2014 which is considered to be its strength. Whereas Intel couldn’t execute its equity in effective way in 2015 and its return on equity remained below as compared to 2014 figure calculated through DuPont equation. The weakness of the company is non-utilization of equity in a proper way as compared to previous year. So this analysis is a comprehensive way to analyze the return on equity in order to know the actual situation of shareholder’s equity and its execution in business activities and in operations to generate maximum return.

Conclusion on Apple Inc.& Intel Corporation

            If all the above discussion is summarized than it is evident that major difference can be appearing in its profitability ratio which is going to be increased after every year. The DSO ratio of Apple and Intel is lower which means that both companies are collecting the amount in a short period of time. Apple Company and its ratios show that the company is moving in an upward direction with slowly and getting the high range of profit and maintain its position in the market. However, the liquidity ratios of Auto nation need a bit of improvement. The net profit margin of the company needs improvement. The profitability of the companies suffers when companies are not utilizing their assets. It is suggested to the company that it must recruit new financial analyst that would help them to improve their performance.

References of Apple Inc.& Intel Corporation

Brooks, R. (2010). Financial Management: Core Concepts. Pearson.

Horne, J. C., & John M. Wachowicz, J. (2000). Fundamentals of Financial Management and PH Finance Center CD (11 ed.). Prentice Hall.

Pinder-Ayres, B. (2016). Financial Management Creative Business Essential. RIBA Publishing.

The Economist, J. T. (2014). The Economist Guide to Financial Management: Principles and practice (2 ed.). Public Affairs.