Business Level Strategies of the apple company

Competitor of the Apple Company and this is very strong force. This is because there are many competitors of this company so due to this the Apply Company has to work on the innovation. They have to make such smart phone whose switching power is low so that they can able to give other companies a tougher competition. The bargaining power of the company’s customer is extremely high because their smart phones are very expansive and this can able to affect their business. This part explains about the buyers how they affect the business. There are two factors that involves for the strong bargaining power of the Apple smart phone buyers that involves low switching cost that is strong force and the other one is the buyer of this phone are too low so that is weak force (Stead, 2014).

Afterwards the next force is the bargaining power of their suppliers and that is weak force. This part tells about the bargaining powers of the suppliers and their demands that affect the business. The bargaining power of the supplier is weak that is based on the two factors that includes there are very high number of the supplier for this company that is weak force and high overall supply of the appliances that is also a weak force. After this the next porter force is the threats for the substitutes and this is also a weak force. In this part of the model there is information about the substitution. This force is weak because that is based on the following factors that include very low availability of the substitutes that is moderate force and the other factors is the low performance of the substitute that is a weak force.

The last force is threat for new entrants this is moderate force because apple is a big brand and also very reliable brand for the customers. For this company the new entrants exerts a moderate force that is depend on these factors the capital cost requirement is very high and this is weak force, the brand development cost is also very high this is also a weak force.

Financial situations of the apple company

Current ratios of the apple company

According to the financial analysis of the Apple Company the current ratios of their company shows that they have enough cash that they can easily able to pay the small loans and also the short term obligations for the company. According to their financial analysis of the last three years of this company, in 2016 the current ratio of this company is equal to the 1.35, for the year 2017 the current ratio is equal to the 1.28 and for the 2018 the current ratio is equal to the 1.12 as it can be seen that these ratios are decreases every year and this is a good thing for the company because they can easily able to invest in the small businesses. This analysis shows that the apple company does not kept excess cash in their hand and this is a good thing. The current ratio of the company must be equal to one and if this ratio is less than one so that they can unable to meet the requirements of the company and also they are unable to pay the loan on time and other main disadvantage is that they are also unable to get financial leverage.

Return on Equity of the apple company

Form the financial analysis of the Apple Company, the return on equity tells about the profitability of the corporation. In other words if the ratio value of return on equity is increased so this means that the company is gaining enough profit. According to the financial analysis of the apple company in 2016 the return on equity value of the apple company is equal to 36.9 and this means that the company profitability is stable, now for the next year 2017 the value of the return on equity is equal to the 36.87 and this value is almost equal to the last year return on equity value. Now for the 2018 the return on equity value for this company is equal to the 49.36 and this shows that in that year the Apple Company gets a lot of profit. The return on equity value must be greater than 25 because this is the last value on which the company can able to get reasonable profit. If this value is less than 25 so that company is unable to get reasonable profit (Pratt, 2010).

Debt ratio of the apple company

The debt ratio is very important for the company. The financial analysis of the Apple Company shows that the company has financed their assets from both debt and equity. According to the financial analysis the debt ratio of the apple company in 2016 is 0.59 and this value is good for their company because they can easily afford these debts. Now for the next year in 2017 the debt ratio in that year moves towards the 0.79 and they can also able to afford this value. Now for the 2018 the debt ratio of the Apple Company moves towards the 0.87 and this value is too much high but Apple Company can able to afford this debt ratio. If the debt ratio of the company is high so they have to work on minimizing the debts. The increasing debt ratio is a matter of concern for the company. The company must have an optimum capital structure. This means that the value of debt ratio must be equal to 40% and the value of the equity is equal to 60% nothing more than that, if the value of equity is greater than 60% so the share holder of the company interfere in the company (Stickney, Weil, Schipper, & Francis, 2009).  

Price earnings ratio of the apple company

This is the simple ratio in which the investors paying 1 dollar for the company’s profit. This means that if the company is reporting basic earning on every share is only 2 dollars and the stock is selling for 20 dollars per shares the price earring ratio will be equal to 10. The price earnings ratio of the Apple is equal to 14.47 and this value is not ideal for the company the price earnings ratio value must be between the 20 and 25. The price earnings ratio for the company can be calculated through the trading price of the company per share value and this cost is divided by the EPS value. The price earnings ratios of the company suggest that the investors have highest expectations for earning growth from them (Anderson, 2012).

Fixed asset turnover ratio of the apple company

According to the financial analysis of the Apple Company it can be seen that the fixed assets turnover value in the 2016 is only equal to 8.71, after this in the year 2017 this value is decreased up to 7.54 and for the year 2018 the fixed assets turnover value is more decreased up to 7.07. So according to the financial analysis the fixed asset turnover ratio of the Apple is decreasing year by year and this is not a good sign for the company management because they will face higher challenges in the future due to this decline in the value. The apple company must have to focus on these values and these values are already high enough but it can be seen that these values are decreasing. If the Apple Company wants to improve their efficiency so they have to maintain these ratios. For improving the fixed assets turnover ratio they must have to hire an analyst for this task.

References of business terms of the apple company

Anderson, K. (2012). The Essential P/E: Understanding the Stockmarket Through the Price Earnings Ratio. Harriman House Limited.

Pratt, J. (2010). Financial Accounting in an Economic Context. John Wiley & Sons.

Stead, W. E. (2014). Sustainable Strategic Management. Routledge.

Stickney, C. P., Weil, R. L., Schipper, K., & Francis, J. (2009). Financial Accounting: An Introduction to Concepts, Methods and Uses. Cengage Learning.