Financial Analysis of Apple Inc.: Market Position and Operations

This comprehensive financial analysis report delves into the performance of Apple Inc., examining its market share, operational costs, and revenue streams. The report begins with a background of the company, tracing its evolution and market positioning. It then proceeds to analyze Apple's market share, highlighting its dominance in the smartphone market, and the factors influencing its performance. The report also provides an in-depth look at Apple's operational costs, including research and development, sales, and marketing expenses, as well as revenue per employee, offering insights into the company's efficiency. Furthermore, the analysis extends to Apple's market value, detailing its capitalization and growth trends. The operating margin and cash flow from operations are examined, followed by a discussion of the costs and benefits associated with Apple's business model, and the impact of regulations. The report concludes with a summary of key findings and references used.

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FINANCIAL ANALYSIS 1
Table of Contents
Background of the Company...........................................................................................................2
Market share of Apple.....................................................................................................................2
Cost for Operation of Apple............................................................................................................3
Revenue per employee of Apple......................................................................................................3
Market Value of Apple....................................................................................................................4
Operating margin, Cash flow from Operation.................................................................................5
Extent of the Gap.............................................................................................................................6
Cost and Benefits of Apple..............................................................................................................7
Cost..............................................................................................................................................7
Benefits........................................................................................................................................7
Regulations......................................................................................................................................8
Conclusion.......................................................................................................................................8
References......................................................................................................................................10

FINANCIAL ANALYSIS 2
Background of the Company
Apple is the leading corporations in the digital market. The company was established in
the year 1976 in California, USA. In the year 1976, the company was introduced as Apple
Computer Inc. for the design as well as manufacturing of the computer electronics, commercial
servers as well as hardware. Apple with time has also brought about a significant reputation in
the computer electronic aspect (Heracleous & Papachroni, 2016). The user of Apple electronic
tends to be fascinated about as well as loyal to the product as well as on the other hand those who
have no experience with the product of Apple criticize them a being too expensive. Later that
year, the company has reached a greater market segment. The company succeeds in making more
than $1 million in annual sales. The company has spread its business through market personal
computers, mobile communication device as well as other portable digital music with video
players (Clarke & Boersma, 2017). The firm also vends a variety of associated software,
peripherals, services as well as interacting solutions. The company has expanded its business
through online stores other than retail stores that enhance the sales and revenue of the company
in an effective manner. In the recent, the company endures to lead the business in the process of
invention with its high-quality processors, iLife, OS X operational system. The company Apple
is also spread legend the digital media uprising with its iPod a moveable music as well as their
video player along with the Apple iTunes online store (Chikhale & Mansouri, 2015).
In the following part, there will be a detailed analysis of the market position of the
company and the manner the company operates in a competitive market. The analysis of the
operational activities will be done in the report that will help in analyzing the efficiency of the
company in an effective manner.

FINANCIAL ANALYSIS 3
Market share of Apple
The statics represents the arcade share of the company Apple in respects to the sales of
the smart iPhone contained by the segment of smartphone from the year 2017 to 2019. In the first
quarter of the year 2019, 11.7 % of all the smartphones that are vended wide-reaching was an
iPhone. Throughout the fourth quarter of 2018, the worldwide trades of iPhone hit 64.5 million
units, making the company Apple 15.8% market share throughout the period. It was despondent
from approximately 73.2 million unit sales as well as 17.9% market share throughout the fourth
quarter of 2017 (Den Hartigh, Ortt, Van de Kaa & Stolwijk, 2016). The drop of apple was the
major decline of any major smartphone maker during the period. The share of Apple rose by 6%
in extending the dealing, to an off-hour value of approximately $165. The standard price of the
company barred at around $157.93 on January, the day when the company Apple dropped the
income forecasts for the quarter as well as bashed 10% off the share. The company has stated the
number for its financial first-quarter user novel edifice that offers the figure of gross margin for
its service as well as products segment as well as suppression the element trades number for its
utmost famous products which include iPhone (Chen & Ann, 2016). The revenue for the service
segment of the company which includes Apple Music, Apple Pay as well as iCloud storage is
topped as $10.9 billion through marking 19% year over year enhances. The company stated a
gross-margin in its services part of 62.8%. The development proportion of approximately 19%
for the group is at stumpy of tendencies. The company raised its service income year over year
by around 17% last quarter as well as around 18% in the year-ago quarter. However, it has a
development rate as high as approximately 34% within the former as well as half a year (Divya
& Kumar, 2016).

FINANCIAL ANALYSIS 4
Cost for Operation of Apple
The operating cost is the mixture of job costing as well as process posting. These are the
cost or expenses that are associated with the maintenance as well as administration of the
corporate on a regular base. The entire operating cost of the organization involves the price of
goods sold, expenses of overhead as well as operational expenditures. The functioning cost is
subtracted from revenue to arrive at functioning revenue as well as it also reflected on the
income statement of the organization (Zhang et al., 2019). Therefore, the operating cost of Apple
Inc. is explained in the below points:
 The company has invested a huge amount of research and development. It has been
analyzed that the overall expenditure on Research and Development occurred $ 11581
billion in the year 2018 and $14236 billion in the year 2018.
 The sales and general expenses of the company occurred in the year 2018 was $16705
billion however; it was lo in the year 2017 which was 15,261 billion. It represents that the
general expenses of the company increase within every next year.
 Moreover, the total operating expenses for the quarter ending March 31, 2019, were
$44.600 billion (Saha et al., 2016).
 The income tax benefits that are linked to the share-based recompense expenses was $
1.9 billion, $ 16 billion as well as $ 1.4 billion for the year 2018, 2017 as well as 2016.
The total unrecognized return cost which is connected to the unsettled with share option
as $ 9.4 billion that the business is expected to identify over a weighted-average era of
2.5 years.
 The company has diversified its business with the help of many products therefore, the
cost of the company varied according to the different segment and products.

FINANCIAL ANALYSIS 5
 The company also invest huge amount on marketing that made the leader in the
international market. The company has invested $ 1.8 billion on the advertisement. The
representative of the company has reviewed that the ongoing investment in the
advertisement, as well as marketing, is critical to the development as well as sakes of the
innovative technologies with products.
Therefore, the company led in the market by investing huge amount in the essential
places such as research and development, on sale and general expenses as well as in the
marketing department to make its product more successful in the market and can able to enhance
its market share with competing its competitors more efficiently and effectively (Soto-Silva et
al., 2017).
Revenue per employee of Apple
Revenue per employee is the fiscal ratio that majorly measures the income that is
spawned by each worker of the society on an middling. Therefore, Apple is considered as one of
the leading company were around 132000 employees are working. The company provided the
huge opportunity of employment in the international market that does not only support the
individual to enhance its skill but also provide an opportunity to the company to compete in the
competitive market more efficiently and effectively (Gravett & Caldwell, 2016). Therefore, it
made the company possible to attract its consumers more efficiently by developing an innovative
product in the market. The company has earned annual revenue of $258 billion. Thus, the
revenue per employee of the company is approximately $1958. Moreover, the company booked
more than $2 million for each of its 110000 staffs in its latest fiscal year. Therefore, such
employee plays a vital role in generating revenue for the company. Employees are the main

FINANCIAL ANALYSIS 6
resources for earning income. It gives the chance to grow in the competitive market in an
efficient manner (Lehmann, 2015).
Market Value of Apple
The stock of Apple Inc. increased or jumped by 0.35% that is jumped to 3.9% in recent
trade that is after plummeting the preceding meeting that is adequate to take the expertise giants
marketplace capitalization rear above $700 billion marks. The company tranquil cliques in the
quarter place on the tilt of utmost appreciated U.S. businesses with the market value of $700.9
billion which is well behindhand the Alphabet Inc. that emblem by 49% to $748 Billion. In
recent, the market value of the company is 207.74 USD that show the progress report of the
company in an effective manner (Zhang, Liang & Wang, 2016).
With the market cap, the worth of the company is over 1% of the GDP at the global level
rendering to the newest estimate of the World Bans that dowel the output of the world at $80.6
trillion. It represents that the corporation is esteemed at over 5% of America’s $19.3 trillion
GDP. In order to make the thing aside, the market CAP of Apple makes the company larger than
the GDP each 183 out of 199 countries (Gehani, 2016).
One would able to think that the financial market sees the huge amount of the money
modification that indicators every day would be better than one distinct firm. However,
rendering to the June 2048, the regular marketplace capitalization for the stock exchange are
amassed by the World Federation of Exchange, the company Apple s consider as the larger than
many stock exchange around the globe in an efficient manner. Some financial markets Apple
eclipse includes Bolsa Mexicana de Valores, Singapore Exchange, as well as Saudi Stock
Exchange (Dolata, 2017).

FINANCIAL ANALYSIS 7
The company also enjoy the time of peak by $232.07 a share on October 3 that gives it a
market cap of approximately $1.16 trillion, it has also dropped to $142.19 billion that smearing
the $450 billion from its value. Its market value also erected at $710 billion. The market cap or
the market value of the company is the furthermost usually castoff technique of determining the
extent of the publicity dealt organization as well as it is intended by growing the recent share
price by the amount of weak stocks unsettled. The market cap of the Apple as of July 2019 is
$955.82 which represent as the growth factor for the company. The market cap of the company
increases every year that showcases the overall performance of the company is increasing at the
regular basis that enhances the market value of the company to the certain extent in an efficient
and effective manner. The performance of the company increases by 9.39 % from last year that
showcases the growth and development of the company in an efficient and effective manner
(Yamoah & Acquaye, 2019).
Therefore, the market value of the company is $9.55 billion in the recent year that
represents an effective growth and development of the company. The company diversified its
business in the different product line and cover a wider range of international market that
enhance the chance for the company to grow successfully in the international market that directly
enhance the market value of the company in an effective and efficient manner (Yusoff &
Husnina, 2018).
Operating margin, Cash flow from Operation
The company had earned a great reputation in the international market for its privacy
system and other services. In the year 2018, the company posted quarterly revenue of around
$62.9 billion which is the increment up to 20% from the year-ago quarter. The three-monthly

FINANCIAL ANALYSIS 8
remunerations of the company per diluted portion of $2.91 are up to 41%. The global sales of the
company are also responsible for 61% of the revenue at quarterly basis. The service income is
also stretched an all-time high of $10 billion. The service revenue increases from around $7.9
billion in the fourth quarter of economic 2017 to $10 billion in the fourth quarter of fiscal year
2018 that enhances up to 27 %. The company is also provided the following guidance for its
fiscal 2019 first quarter:
 Income between $89 billion as well as $93 billion
 Gross margin between 38% as well as 3805 5
 The operational expenditures amongst $8.7 billion as well as $8.8 billion
 Other revenue of approximately $300 million
 Rate of tax of appropriately 16.5 % before separate item (Kang, 2018)
However, the business also aspects convinced encounters in managing security in are
business that exaggerated general sales of the firm at a countless level. The company is known
for its privacy and security services but the scandal case of I cloud affected the overall brand
image of the business at a better level. In the past year, the nude images of celebrities taken from
their icloud records and have hazardously disclosed. The company has a statement that such
incident involved the theft of username and passwords that give access to the criminals to use
icloud files through the password information of celebrities as according to which the icloud
database was not breached. However, iCloud depends on the similar icloud-based net
construction in which utmost firms depend on that also include Amazon Web Service, Google
Cloud Platform as well a Microsoft Azure. The file is impassable as well as such involve those
uses of iCloud. A solitary example of seeped statistics on an insider stealing also put the
organization at thoughtful reputational jeopardy to a certain extent (Cult of Mac, 2019).

FINANCIAL ANALYSIS 9
The third-party application is also a potential sticking point for the company. Rom the
point of view of security, the app store of Apple has strengthened the protections in dwelling that
brand it buoyant to safety subjects such as claim deceiving that the participants such as play store
of Google. The independent app of the iPhone still has a chance to exploitation the data. The
business continuously eliminates the apps from the hoard for proving the user evidence to an
unsanctioned third party.
It represents a potential gap in the security policy and practices due to the reason, it has
been stated that the apple will secure the personal data of its consumers efficiently however, it
goes beyond such expectation. The people lose faith in the brand that exaggerated general sales
of the corporation at a grander level. Moreover, the market value of the company also fallen
down from such activities. As the company did not accept its mistake properly that enhances the
level of dissatisfaction among its consumers to a greater extent (Cult of Mac, 2019).
The extent of the Gap
The gap of the security policy and practice affected the company at a greater level. The
company uses the third-party application to store the information of iCloud that provide an
opportunity to the hacker to hack the data or information of the consumers’ hat misuse it. It has
protected security to a certain extent however; still, the app of the iPhone has a capacity to
misuse the data of its consumers. One of the newspaper reported that frequent free iOS apps
pathway thorough user evidence as well as deliver it to the third parties that create an issue of
misusing the data or information of the consumers (Landau, 2016).
The company covers its sales in an effecting manner to a certain extent. The company is
barely at peril of trailing its excellent worthwhile corporate of phone. The considerable sale

FINANCIAL ANALYSIS 10
fallen down would be the major breeze the organization that has winner meanwhile the death of
Steve Jobs. The shipment of the company falling by 20% that created a big influence on the sales
of the corporation. The extension of Apple of important exchange value has also been seen as a
sign of how weak claim for the novel device is. The company historically does not offer any kind
of discounts, so a usual move could also be paying dividends that the common individual has not
seen yet. The company also lack in providing efficient features in their product that lead to slow
down the sales of the business to a definite range (Chen & Ann, 2016).
The billing option is also linked with the system of the company therefore if any bug
occurs in the system of the company, it directly affected the overall billing system of the
company. In other words, billing is done by the company through online system therefore, if any
bug occurs in the internet system it may affect the billing system of the business to a convinced
degree. The company has not prepared an effective back up for such a system that may affect the
overall performance of the company to a certain extent (Etzioni, 2018).
The marketing system of the company is very effective while comparing with the other
competitors. The company has adopted a huge amount on marketing its product t attract the
consumers at a maximum level. However, some of its marketing strategies are not so effective
that attract consumers. The company also not covers the marketing of iWatch that may make
unaware of some of the consumers for the product those pretentious general sales of the business
to a definite degree. Moreover, the company focuses on the immediate requirement as opposed to
those that might affect the long term future. The marketing strategy of the company is not as
attractive as its competitors that make the company less effective in the market at greater level
(Lee, Lau& Loi, 2016).

FINANCIAL ANALYSIS 11
The production system of the company is a little bit slow while comparing with the other
companies. The company delayed in launching XR that is not able to create a healthy sale for
such product in the market. The slow production attracts the overall performance of the company
to a certain level. According to the report, the XR was lunched late due to the slow production
process. It has been reported that due to the reason of capacity constraints as well as delayed
shipments, it has caused some of the production issues over at Pegatron who was tapped to be
one of the iPhone XR’s manufacturers (Nieborg & Poell, 2018).
Therefore, it is required for the company to enhance its services there is a certain manner
that the company can enhance its services and reduces the gap as they are explained in below
points:
 It is required for the company to enhance its sales process in which they can provide its
services through other online stores. It will help the consumers to reach out the product in
a more efficient manner
 The company should use other software as well to create a strong back up of billing
option. If the server goes down, it can able to billing its product through other sources as
well. It will help in satisfying the consumers by providing efficient services to the
company in an effective manner.
 The marketing process should be strong. The image of the company already adversely
affected due to the reason of such scandal case. Therefore, t is required for the company
to adopt such a method that would help them to enhance its services more efficiently.
 The production process of the company should also require to improve due to the reason