Facebook and Apple Inc. Merger: A Financial Analysis Presentation

Desklib provides past papers and solved assignments for students. This presentation analyzes a hypothetical merger between Facebook and Apple.

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Mergers or business acquisition activities in large companies are a very complex process because
there are numerous matters which are required to be settled correctly. This presentation will
consider the merger event of Facebook and Apple Inc and, present detailed information about
each aspect of merger event. Through this presentation, the user will be able to understand the
market position and stability of both companies along with the process of corporate decision-
making.
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The merger of Facebook in Apple Inc will open new areas of business for the new company.
Merger of businesses is an effective way for the multinational companies to correctly handle the
issues related to the globalisation and market changes.
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From the analysis, it has been detected that apple is one of the largest technology companies
which is known for its unique technology updates. In 2017, EPS of the company was 3.358 per
share which is expected to be enlarged to 4.394 in 2019. In the next five years, 9.22% growth is
expected in sales volume so it can be said that the company will generate huge profits for
shareholders. As per the user opinion, Apple devices are known for their unique features and
technology updates.
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Facebook is one of the largest social media companiesandworking in more than 60 countries.
From the profitability analysis, it has been mark-out that five-year average gross margin of the
company is 83.25% which is higher than the industry standard of 43.47%. Online free calls,
video streaming and chats are some unique services of Facebook Inc.
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Both Facebook and Apple are listed companies, so comparison of market share prices is an
effective way to determinate the performance of companies. A company which is reporting
stable and increasing trends of share prices will be more suitable for the investors in comparison
of a company which is showing declining trends in share prices. From the comparison, it has
been detected that both companies are performing well and suitable for the investors. From the
one year comparison, it is identified that both shares are aggressive investment options.
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Analysis of profitability is an effective way to determinate the financial stability of the company.
Above compassion is proving that both companies are generating great profits but Apple is
handing operational costs more effectively. EPS of Apple Inc is $ 12.01 per share which is
higher the EPS of Facebook Inc $ 7.65 per share. On the basis of this, it can be said that Apple is
highly suitable for external investors because it is generating higher returns.
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The capital structure of Apple Inc is including equity, financial debts and reserves.
Approximately 19% part of the capital structure is covered by the equity capital while 48.90%
part is covered by the financial debts. The balance of Term-debts is presenting the loans and
other interest-bearing liabilities which are taken from the external market. The company has
some specific reserves along with a significant balance of accumulated losses.
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From the analysis of capital structure, it has been identified that 51% part of face book's capital
structure is covered by the equity capital. 49% part of the capital structure is covered by the
reserves and retains earnings. Findings are claiming that Facebook is highly secure for external
loan providers because the degree of leverage risk is 0.
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Comparative analysis of capital structure is highly useful in the determination of the leverage
risk that is associated with the organization process. It can be seen that Facebook does not have
any long term debt and the company just has the capital structure with just an equity portion. The
situation is enough to conclude that leverage risk of Facebook is nil, so it is a conservative
investment option.
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