Applied Managerial Finance Analysis 2022
Added on 2022-10-10
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Running Head: Applied Managerial Finance
Applied
Managerial
Finance
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Applied
Managerial
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Applied Managerial Finance 1
Contents
Background......................................................................................................................................2
Financial Analysis...........................................................................................................................2
Ratio Analysis..............................................................................................................................2
Summary of Ratios......................................................................................................................3
Illustration of Potential Financial Strategies Employed..................................................................4
Capital Expenditure.....................................................................................................................4
Merger and Acquisition...............................................................................................................5
Stock Repurchase.........................................................................................................................5
Dividend Policy Adjustment........................................................................................................5
Debt Reduction............................................................................................................................6
Geographic Expansion.................................................................................................................6
Product or Service Expansion......................................................................................................6
Strategy Selection............................................................................................................................6
Financing and Risks.........................................................................................................................7
WACC.............................................................................................................................................7
Impact on Company.........................................................................................................................8
Impact on Interest of Shareholders..................................................................................................8
References......................................................................................................................................10
Contents
Background......................................................................................................................................2
Financial Analysis...........................................................................................................................2
Ratio Analysis..............................................................................................................................2
Summary of Ratios......................................................................................................................3
Illustration of Potential Financial Strategies Employed..................................................................4
Capital Expenditure.....................................................................................................................4
Merger and Acquisition...............................................................................................................5
Stock Repurchase.........................................................................................................................5
Dividend Policy Adjustment........................................................................................................5
Debt Reduction............................................................................................................................6
Geographic Expansion.................................................................................................................6
Product or Service Expansion......................................................................................................6
Strategy Selection............................................................................................................................6
Financing and Risks.........................................................................................................................7
WACC.............................................................................................................................................7
Impact on Company.........................................................................................................................8
Impact on Interest of Shareholders..................................................................................................8
References......................................................................................................................................10
Applied Managerial Finance 2
Shareholder Value Initiative
Background
The purpose of the report is to enlighten the reader with the details about the company
Apple Inc. The scope of the project is to analyse the ways in which the organization should
implement strategies so as to increase the value of the stakeholders of the company. The
financial risks and analysis of several strategies is analysed in the paper so as to choose best
strategy for the company. Further, financial ratio analysis of the company Apple is performed in
the paper in comparison to the financial analysis of the company Microsoft in the business
environment (Minnis, & Sutherland, 2017). The proposal does not seek to examine all the factors
present in the environment that can increase the stockholder value or the impact of combining
multiple strategies in the environment. More details of the functioning of the company are
mentioned below:
Financial Analysis
Ratio Analysis
Ratio analysis refers to the analysis that judge the performance of the company on the
basis of several factors in the environment. The ratio analysis of Apple evaluates the financial
performance of the company in different segments like risk, profitability, efficiency, solvency
etc. It helps in comparing the trend of two or more companies. The ratio of Apple is conducted in
comparison to the Microsoft on the basis of recent financial details of both the companies present
in the market. Ratios evaluated in the paper are profitability, liquidity, solvency, dividend yield,
price earning and market book ratio. Profitability ratio helps the investors in analysing the ability
of the business to generate profits in the market (Williams, & Dobelman, 2017).
This ratio helps in analysing that how well Apple makes use of investor’s income to
attain profits in environment. Liquidity ratio explain that how well the company can pay its short
term loans and obligations in the environment. Operating cycle of 12 months is considered to
analyse the liquidity statement of the company. The solvency ratio of the company examines the
ability of the organization to meet the long term requirement of the business. The liquidity ratio
Shareholder Value Initiative
Background
The purpose of the report is to enlighten the reader with the details about the company
Apple Inc. The scope of the project is to analyse the ways in which the organization should
implement strategies so as to increase the value of the stakeholders of the company. The
financial risks and analysis of several strategies is analysed in the paper so as to choose best
strategy for the company. Further, financial ratio analysis of the company Apple is performed in
the paper in comparison to the financial analysis of the company Microsoft in the business
environment (Minnis, & Sutherland, 2017). The proposal does not seek to examine all the factors
present in the environment that can increase the stockholder value or the impact of combining
multiple strategies in the environment. More details of the functioning of the company are
mentioned below:
Financial Analysis
Ratio Analysis
Ratio analysis refers to the analysis that judge the performance of the company on the
basis of several factors in the environment. The ratio analysis of Apple evaluates the financial
performance of the company in different segments like risk, profitability, efficiency, solvency
etc. It helps in comparing the trend of two or more companies. The ratio of Apple is conducted in
comparison to the Microsoft on the basis of recent financial details of both the companies present
in the market. Ratios evaluated in the paper are profitability, liquidity, solvency, dividend yield,
price earning and market book ratio. Profitability ratio helps the investors in analysing the ability
of the business to generate profits in the market (Williams, & Dobelman, 2017).
This ratio helps in analysing that how well Apple makes use of investor’s income to
attain profits in environment. Liquidity ratio explain that how well the company can pay its short
term loans and obligations in the environment. Operating cycle of 12 months is considered to
analyse the liquidity statement of the company. The solvency ratio of the company examines the
ability of the organization to meet the long term requirement of the business. The liquidity ratio
Applied Managerial Finance 3
consider short term liability and solvency ratio analyse the non-current liability of the company.
Dividend yield ratio analyse the percentage of the market price of the share that the company
annually pays to its stockholders in the form of dividend. This ratio compares the dividend
distributed by the company against the share price. Price earnings ratio evaluate the current share
price of the company against the per share earnings (Robinson, Henry, Pirie, & Broihahn, 2015).
Market to book ratio analyse the market value of the company relative to its actual worth
in the market. This ratio analyse that whether the stock of the company is overvalued or
undervalued.
Summary of Ratios
Profitability
Net margin Net profit/revenues 21.09% 22.41% 23.57% 15.02%
Return on equity Net profit/Equity 36.07% 55.56% 29.29% 20.03%
(Morningstar, 2019)
The profitability ratio explains that the company Apple enjoys better level of profitability
in the environment. This ratio is increasing from the year 2017 to 2018 that means that the
company is growing and increasing profits for stakeholders in the environment. While the
profitability of the company Microsoft is low in the environment (Edwards, Schwab, & Shevlin,
2015).
Current ratio
Current
assets/current
liabilities 1.28 1.12 1.58 4.24
Quick Ratio
Current assets-
Inventory/current
liabilities 1.23 1.09 1.56 4.18
(Morningstar, 2019)
Liquidity ratio of the company Apple is optimum as it is close to 2, however, increase in
the assets of the company would definitely strengthen the financial position of the organization.
The company holds adequate capacity to pay its short term expenses in the environment.
However, in the case of Microsoft, it should be noted that the company’s liquidity ratio was
adequate in 2017 but it increased in 2018 due to increase in the liabilities of the company.
consider short term liability and solvency ratio analyse the non-current liability of the company.
Dividend yield ratio analyse the percentage of the market price of the share that the company
annually pays to its stockholders in the form of dividend. This ratio compares the dividend
distributed by the company against the share price. Price earnings ratio evaluate the current share
price of the company against the per share earnings (Robinson, Henry, Pirie, & Broihahn, 2015).
Market to book ratio analyse the market value of the company relative to its actual worth
in the market. This ratio analyse that whether the stock of the company is overvalued or
undervalued.
Summary of Ratios
Profitability
Net margin Net profit/revenues 21.09% 22.41% 23.57% 15.02%
Return on equity Net profit/Equity 36.07% 55.56% 29.29% 20.03%
(Morningstar, 2019)
The profitability ratio explains that the company Apple enjoys better level of profitability
in the environment. This ratio is increasing from the year 2017 to 2018 that means that the
company is growing and increasing profits for stakeholders in the environment. While the
profitability of the company Microsoft is low in the environment (Edwards, Schwab, & Shevlin,
2015).
Current ratio
Current
assets/current
liabilities 1.28 1.12 1.58 4.24
Quick Ratio
Current assets-
Inventory/current
liabilities 1.23 1.09 1.56 4.18
(Morningstar, 2019)
Liquidity ratio of the company Apple is optimum as it is close to 2, however, increase in
the assets of the company would definitely strengthen the financial position of the organization.
The company holds adequate capacity to pay its short term expenses in the environment.
However, in the case of Microsoft, it should be noted that the company’s liquidity ratio was
adequate in 2017 but it increased in 2018 due to increase in the liabilities of the company.
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