Financial Analysis of Apple and Google

MANAGERIAL ACCOUNTING
GOOGLE & APPLE
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MANAGERIAL ACCOUNTING
Introduction
Apple and Google have witnessed rapid growth in the last decade or so and this is reflected in
their market capitalization. The objective of this report is to analyse the financial statements
of the two companies and highlight some of the expenses that incur cost and discuss whether
these need to be rationalised or not. Additionally, the report would also highlight the type of
businesses that these companies form considering the product/service offerings. Besides, the
utility of activity based costing at these companies is also critically analysed to recommend
whether these are useful or not.
Analysis
The various aspects that have been highlighted above would be analysed in the given section.
Expenses
By referring to the current financial statements of Google and Apple, it is apparent that two
activities where costs are incurred are research & development and sales & marketing (Apple,
2017; Google, 2017). Clearly, research & development is a source of competitive advantage
for both the companies and essential so that these companies are able to embrace the new
technologies and shift in consumer preferences. Besides, sales & marketing related costs are
imperative in order to maximise the revenue and profits for the company (Apple, 2017).
While it is true that these are quite pivotal expenses for both the businesses, however, there is
a need to be prudent as any wasteful expenditure even with regards to these two activities
would lead to deterioration of shareholders’ wealth (Damodaran, 2015). Hence, it is
imperative that while the companies do not need to curtail or control the costs on these
activities but should maintain prudence so as to avoid wasteful expenditure. This is especially