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Apple vs Google from financial management

   

Added on  2020-06-04

25 Pages5695 Words270 Views
Comparison Apple vs Google fromfinancial management

TABLE OF CONTENTSOverview of the study..................................................................................................................1Aim and objectives of the study..................................................................................................1Literature review..........................................................................................................................1Research methodology.................................................................................................................31. Comparing financial performance and position of Apple in against to rival firm Google......42. Stock market performance.....................................................................................................133. Assessing elements that help in assessing long-term viability of manufacturing.................15CONCLUSION..............................................................................................................................17RECOMMENDATIONS...............................................................................................................17REFERENCES..............................................................................................................................19APPENDIX....................................................................................................................................211. Share price evaluation of Apple v/s Google..........................................................................21Figure 1: NP ratio............................................................................................................................5Figure 2: Retrurn of Capital Employed Apple V/s Google.............................................................5Figure 3: Current ratio.....................................................................................................................7Figure 4: Quick ratio........................................................................................................................7Figure 5: Debt-equity ratio..............................................................................................................9Figure 6: Fixed assets turnover ratio.............................................................................................10Figure 7: Total assets turnover ratio..............................................................................................10Figure 8: Inventory turnover ratio.................................................................................................11Figure 9: EPS Apple v/s Google....................................................................................................12Figure 10: DPS of Apple...............................................................................................................13Figure 11: Stock performance Apple v/s Google..........................................................................14

Overview of the study Financial analysis is the process that assists company in analyzing whether its monetaryposition and performance is good or not. In the recent times, firms lay high level of emphasis onmeasuring or evaluating their performance over the years and in comparison to the rival firm.This in turn gives clear indication to the firm about the areas that require improvement and givesinput for the development of competent as well as strategic framework. The present report isbased on Apple, a leading American multinational technology company, which is involved indesigning and selling electronic and computer related products or services. In this, report willhighlight the extent to which financial aspects or management of Apple is sound as compared toGoogle. With the motive to present fair view of study and evaluation Google, another leadingfirm of America which is engaged in offering internet related services, has been selected. Alongwith this, report also depicts the manner in which returns associated with the stock of Apple andGoogle were fluctuated over the time frame. Further, it also entails the aspects that assist inevaluating long-term viability of manufacturing. Aim and objectives of the study Aim of the present study is to analyze or evaluate financial management practices ofApple over its rival firm Google. On the basis of such aim following objectives have draftedsuch as:To analyze financial position of Apple over the years and in against to competitornamely Google. To evaluate stock returns of Apple over its competitor Google. To ascertain elements that helps in assessing long term viability of manufacturing. To recommend suitable ways that aid in effective financial management of Apple. Literature review Theme 1: Ratio analysis and evaluation of firm’s financial performance According to the views of Sujan and et.al., (2017), ratio analysis may be served tool thathelps in summarizing financial statements and gives quick as well clear indication in several keyareas. Hence, by undertaking the tool of ratio analysis firm can assess profit margin generatedover the years and in against to competitors. Hence, by analyzing profitability through the means

of ratio analysis firm can develop effective strategic framework. However, on the critical note,Maynard (2017) said that ratio analysis technique presents financial performance on the basis ofpast data set, whereas management is concerned about future aspects. Thus, such technique doesnot reflect current condition or position and thereby impacts future planning’s. Further, Rehmanand et.al., (2015) mentioned in their study that ratio analysis tool furnishes information about thelevel to which liquidity and solvency position of the concerned firm is sound. Thus, outcome andevaluation of ratio analysis aid in decision making aspects to a great extent. This in turn givesclear indication to the firm about the sources of finance that it needs to undertake for buildingand maintaining suitable financial structure. On the contradictory note, Kou, Peng and Wang(2014) mentioned that lack of standard pertaining to making comparison of performance isrecognized as one of the major limitations. Further, Jordan (2014) identified that through performing ratio analysis business unit canassess its position over the rival firm. Besides this, it also assists firm in identifying strategicaction or measure that it needs to undertake for gaining competitive edge over others. However,it is to be critically evaluated by Ibn-Homaid and Tijani (2015), who said that, irrespective ofhaving IASB and IFRS different business units undertake varied accounting policies. In suchcase, it is not possible for the firm to evaluate or compare its position over rivals in the bestpossible way. Vogel (2014) depicted in their study that by comparing cost, sales, profit marginand other numeric figures via ratio analysis technique firm can measure its operational efficiencyaspect. Thus, by using tool firm can make appropriate forecast regarding future businessactivities in numeric terms. Considering such assessment it can be said that ratio analysis is themost effectual tools that help in evaluating performance and aid in appropriate decision making. Theme 2: Factors that have an influence on share price Mantzari and et.al., (2015) stated that attainment of high margin from fund invested isone of the main motives of investors. Thus, before investing money concerned or potentialshareholders make evaluation of firm’s performance to analyze return. There are several internaland external factors that influences share prices of firm. As per Wahlen, Baginski and Bradshaw(2014) internal factors such as company’s new and performance has significant impact on shareprice. In the study, they mentioned that news release on earnings and profit has greater impact onshare price. Along with this, announcements related to dividends, anticipated takeover and

merger, employee layoffs, anticipated errors etc have significant influence on stock price. On theother side, Jenter and Kanaan (2015) argued that along with internal there are some externalfactors which in turn affects share price. In this regard, external factors include investorssentiment also has influence on stock value. In other words, sentiments or confidence ofinvestors in relation to increasing or decreasing price level has high level of impact on stockperformance. Zhang and Pan (2015) claimed that movement take place in exchange rates, goldprices & bond having an impact on the prices of stock. Along with this, economic conditions andstock prices are significantly associated with each other. On the basis of such aspect, wheneconomic conditions are good then investors feel high level of confidence. The rationale behindthis, at the time of good economic outlook, companies perform well, earn high margin and offersdividend to shareholders with increasing rate (North and Stevens, 2015). Thus, both internal andexternal factors have high level of impact on share prices of the firm traded on stock exchange. Research methodology Research type: Specifically, there are mainly two research types that can be undertakenfor evaluating issue. In this, quantitative research type has been selected for analyzingfinancial position of Apple over Google. Besides this, stock performance evaluation ofboth the concerned companies is based on quantitative data set. Considering all suchaspects, quantitative research technique has been selected. Data collection: In order to assess financial position and performance of Apple in againstto Google monetary data has been gathered from the financial statements of theconcerned firms for five years period. Hence, by evaluating final accounts of Apple andGoogle pertaining to period 2013 to 2017 data regarding profitability, liquidity andsolvency aspect has been gathered. Along with this, books, journals and scholarly articlesrelated to ratio as well as stock return analysis has also been evaluated to gainunderstanding about the issue investigated. Data analysis: For analyzing gathered data set in the best possible way and meetingresearch objectives ratio analysis tool has been applied by scholar. Hence, through themeans of ratios, extent to which profitability, liquidity and solvency position of Apple inagainst to Google has evaluated.

1. Comparing financial performance and position of Apple in against to rival firm Google Ratio analysis is the most effectual financial tool that assists in evaluating performance offirm under different categories such as profitability, liquidity, solvency, efficiency andinvestment. Ratio analysis of Apple v/s Google from 2013 to 2017 is as follows: Profitability ratio analysisApple GoogleFormula 2013201420152016201720132014201520162017ProfitabilityratiosGross profit 64,30470,53793,62684,26388,18633,96740,31046,82555,134Net profit 37,03739,51053,39445,68748,35112,92014,44416,34819,47815682Salesrevenue 170,910182,795233,715215,639229,23459,82566,00174,98990,27278532Shareholder's equity 123,549111,547119,355128,249134,04787,309104,500120,331139,036157100NP ratio 21.7%21.6%22.8%21.2%21.1%21.6%21.9%21.8%21.6%20%ROCE 29.98%35.42%44.74%35.62%36.07%14.80%13.82%13.59%14.01%9.98%

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