Principles of Business Finance (Apple Inc)

Running head: PRINCIPLES OF BUSINESS FINANCE (APPLE INC) 1
Principles of business finance
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Principles of business finance (Financial Report Analysis of Apple Company)
Introduction
In the world of finance, principles act as a guideline for the financial and investment
decision. Thus, finance can be defined as the process of collecting money and ensures proper
utilization of money. Before a company is started there are basic principles of investments
they should consider. To start up a business there is a need for capital to ramp it up to
profitability. Therefore, there are several sources of financing for start-up businesses which
will vary according to the size and type of business. These sources include equity financing,
debt financing, and leasing of business property. Investors should take the risk and return so
as to ensure optimum rates of return. Businesses such as such as the Apple Inc. has invested
on time value of money in that they understand the inflation rate of the economy. Over the
last two years to five years the Apple Inc stock has increased up to 97% and over 273%.
Currently the stock of the Apple has become cheaper while the growth remains at a healthy
state. The Board of directors have authorised an increase in the organization’s program of
more than 50% to return capital to stakeholders.
Organization Background
The Apple Inc. was founded by Steve Wozniak, Steve jobs, and Ronald Wayne in the
year 1976 in a California for the development and selling of personal computers. In1977 it
was incorporated as Apple Company. The company for the last 30 years it has manufactured
computers and in 2001 Apple Company introduced an IPod music player as new product to
the market. The Apple Company has thrived due to its innovative ability to come up with
products such as the iPhone. Over the recent years, Apple Inc. has developed it through the
corporate governance to form sustainable process that helps customers. The Apple Company
is an innovative company and insights Consultancy Company that empathically connecting

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brands with the humans they serve. Whose vision is produce better goods, brands and
services to customers while improving on their social relationship with them? While its
mission is seeking to do three great things to people such as to release the potential in people,
to Inspire and cultivate big ideas, and do good in the world.
Investment Rationale
As stated in the introduction I selected Apple Inc. stock as an advice to the client
investment due to some significant factors. These factors that support my decision include the
organization’s stock prices, the organization’s commitment to innovation, organization’s
success, and consumer loyalty. Apple Company has grown to be one of the successful
businesses since the launch of the first IPod in 2017 in the world. According to Forbes the
company has been placed as the largest technology organization, also the 12th largest publicly
traded company, and the most valuable brand with an estimation value of $600 billion. It has
grown with a larger market cap than Microsoft and Goggle Companies combined. In 2010 the
annual revenue of Apple Inc. grew from $65 billion to $127 billion in 2011 and in 2012 was
$156 billion, (Morden, 2016).
In terms of stock prices it rose from $1 to $110 between 2001 and 2014. The earnings
ratio of price during this time was ahead of its market share, which was due to brand loyalty
and product innovation. But recently the stock prices took a considerable drop down of 14%
despite the tremendous success of Apple Inc. from their higher stock prices of $134 in 2005,
(Form 10-k, Annual Report of Apple Inc). Therefore this decrease makes Apple Company a
value play investment for the client. This is because the value of the stock is worth far more
value than the price, thus, making the current investors to startle while providing a buying
opportunity for the client. Apple Company in addition to innovation it is known well for its
present product line, for instance , iPod began as iPod mini, later on it evolved to iPod touch,

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to iPod Shuffle, then to iPod Classic, to iPod Nano, to iPhone and eventually to IPad. The
stock of Apple Inc, overall it has been unfailing mean while there is development in
innovating products such as Apple Pay for the current and future investment, which will be
an additional growth to the Apple Company.
The organisation has grown to establish a robust logo and market function, however,
Apple Inc. faces high danger of net fraud. Efficient enterprise version has been assisting
Apple Inc. to amplify its customer base in addition to revenue. The web marketplace offers
unlimited style of goods and excellent of products, which conventional marketplace might
not be capable of providing. Furthermore, Apple Inc. maintains 0 inventories unlike
amazon.com and other competitor, which makes it possible for it to overlook stock costs. The
size of Apple Inc. marketplaces is considered one of the most important within the world.
Over 3 million objects are bought day by day across 50,000 classes on iTunes Stores.
However, the Apple Company debt is approximately 13% proportion of the global
ecommerce. Apple Inc. advertising and classifieds brought in remarkable deal of income.
12% of total internet revenue is resulting from advertising sales, (Carter, R., et al., 2016). In
2009, Interbrand design discussion board ranked the company eleventh in the category of
“the maximum treasured US re-tail brands”. Besides Apple the other outlets with simplest on-
line presence at the listing have been Dell.
Investor Profile and Investment Strategy
As a financial analyst I have to first determine the clients profile and match it with the
organization that will meet its goals before choosing the organization for the client. But you
need to understand the investor in order to take the next step. This is because some investors
prefer buying of stock and hold them over a period of time for it to increase in value while
others prefer buying and selling them quickly for profit. In relation to the careful analysis of