APPLE Inc. financial performance

Introduction

Every business needs a stable financial system. Companies that better commercial operations tend to be stable in the market. Proper economic progress can make a company very successful while managing financial activities can be taken with a lot of focus and care. This will fuel the company productivity, lower cases of risks, and can amount to better risk mitigation taking care of the whole business. Any institution with a better financial system and proper risk management strategies has higher performance. Better management and reduced competition in the market makes a company perform better in the market. This research is aimed at investigating the APPLE Inc. financial performance; it will highlight the company summary from 1st June 2018 to May 2019.Evaluating Apple market share, revenue perspective of the cash flow over the last four years. The company efforts to reduce risk as well as the estimated company cost of capital. The company stock price change will be discussed.

Summarize the company’s 1 June 2018 – 31 May 2019

Apple Inc. is a leading company in the world; it deals with manufacturing and sells computer software, consumer electronics, and online services. It was found by Steve Jobs and Steve Wozniak and Ronald Wayne in California Us. Apple is second leading phone manufactures in the world. Apple is a larger IT company. It has over 500 retail stores and has employed over 120000 people. The company is guided by its mission to provide personal best personal computing experience to all walks of life. Some of the products it sells include, personal computers (Mac), I pad tablets, iPhone, apple watch series, apple smart Tv, and online services such as iTunes and apple music.On July 31, 2018, the company attained revenue of $53.3 billion; this was an increase of 17% as compared to the previous fiscal year. The international sales were 60% of this revenue. These June quarter results come from strong sales of iPhones, wearable, and services as the company CEO highlighted it.

The reliable company performance drove revenue growth in all geographical segments, by net income of $11.5 billion and operating cash flow of $14.5 billion. The company returned $25 billion to investors vial capital retunes plan this included $20 billion in repurchased shares. The company had a quid line for the next fiscal quarter; Apple Company provided revenue between $ 60 -$62 billion. On 30 April Apple announced quarterly revenue of $58 billion, 5 percent decline from the previous fiscal year, the quarterly earnings per diluted share was  $2.46 this was also a decline as compared to last year it reduced by 10%. Moreover, the company had a global share that formed 61% of the quarter’s revenue. According to the statistics, there was a generation of $11.2 billion, and the company returned $27 billion shareholders, this was done through dividends and share purchase.

State and discuss the company’s cash flow over the last four years

Considering the performance of Appl Inc, cash flow in the previous four years, it is clear that the company has never had a better trend. The company financial year of 2015 had a net worth of $ 109.1Billion.According to the apple company in the last four years, the cash flows show the company not worthy of Apple Company from 2015 up to date. Has been decline and rising depending on the sales and market as well as the dollar strength. In the market segment which is commonly the domestic market America, the United Kingdom, and China market and among other Australian and African states.

The apple statistics shows that in the annual year 2016, the company cash flow had a significant decline the cash flow was -0.36B this was a decline of $108.74 as compared with the 2015 fiscal year cash flow. According to the research, this decline resulted from some incidences such as a change in the economy, product roll over, and the strong dollar values in the market. Moreover, the following year, apple annual cash flow in 2017 was $-0.195 B this was 69.34% decline from 2016. This means that the company was not doing well in the marketing sector. Apparently, in the year, 2018 apple cash flow evaluation shows that for in 31st March 2019 was $450.068 B this was a 67 .65% increase year over a year. This implies that the company had diversified its marketing strategies, reaching out to many customers and many market segments.

Currently the apple net worth of the net flow for the 2019 quarter ending in March was $13.90 B a 43 .87% decline a year over a year. This cash flow decline implies that there is no many sales or market is not suitable for the company. For instance, there is the probability of reduction of the market of Apple Inc. produces; iPhone in China .china is having a competitor and a rival mobile phone brand, Huawei, which has currently banned from selling these products in America. This war has created differences in marketing the apple products in China and also other neighboring states. If China bans apple products in China, it will impact the cash flow since this is the third large market for Apple products.

Estimate what percentage of the company’s revenue comes from domestic and international sales.

According to the research, Apple Inc. has got both the local and international market. According to the revenue generation broken in a different geographical region, it is clear that Apple has generated 25.6 billion USD in the domestic market .in the second quarter of 2019 financial year.

According to the statistics, this company has generated annual revenue of 266 billion USD. This was an improvement as compared to the previous financial year. It apple had made 230 billion USD in the taxes. The critical segment for this company, which is associated with having profits, is iPhone sales. Its sale has been increasing and this increase the apples total revenue. In the first quarter of 2018 iPhone generated 69.74 % of the total revenues of Apple Inc.

According to the history in the first quarter of 2019, Americans are the critical profitable geographical region for the apple, meaning that the domestic market is leading in higher sales of iPhone. Europe market is following as it can be seen at the end of 2018, there is also an apple revenue obtained from markets such as China which is home of the smartphones market. China is the third market when it comes to regional sales of apple following Europe; while America is leading in revenues collection for apple .it can, therefore, be concluded that domestic demand is a higher contributor of the taxes as compared to the international l market revenue generation to apple.

Discuss whether the US/CDN dollar strengthen/weaken over the last three months versus other major world currencies

According to the previous three months, the Exchange rate of dollars to other currencies such as China Yuan and UK euro has been stable, no much fluctuations daily. Meaning the apple business is not likely to be affected by dollar weakness in the market. As explains in the following figures, China has recently strengthened Yuan to appease the United Nations president. Thus giving room for Apple Inc to invest extensively in China market, based on the fact that China is the home of smartphones like Huawei. United Kingdom market is the second largest market of the Apple Inc. products. This region uses euros, and the exchange rate of the euro to the American dollar has been stable within the previous three months. This gives the company a room to venture in much business in this trade region, hoping to gain some revenue.

According to history, apple products are sold in US dollars. Since Apple is American based, it markets its products in US dollars.in the international market, the products are common currency in the UK which uses euro and some Apple products are traded in China which use Yuan. America uses the dollar, and it has a significant portion of Apple Inc. Product sales. According to the exchange rates comparing the US dollar strengths and weakness over the last three months versus the major world currencies, there are no many weakness of the currencies used in the selected market regions. Reflecting on this, it is apparent that the Apple Inc. trade can also impact the other currencies value.

With information taken from the company’s financial report, discuss how the company tried to manage its exposure to exchange rate risk? Discuss the types of vulnerabilities?

Considering the apple Inc. financial report, it is apparent that the company made some earnings from iPhone sales, the and the iMac. The company is very keen to ensure that it notices the price fluctuation in all market segments based on exchange rate risk. Focusing on the business the company has come across some .Apple Inc. has tried to overcome market risk by diversifying its products. For instance, the company has come up with new iPhone brands making clients all over the world get interested. It is very accurate that person using, iPhone 7plus could be interested in purchasing iPhone 8.this diversification of products make the product competitive in the market and more valuable. Apple Focused on reducing risks in all means by studying the market and intensifying new marketing strategies to win more clients in the market., This has enabled the company to become more competitive in the market. Due to the current situation in the states and the market place, the company has also focused on Change of some commodities to meet the market standards and the customer’s needs. Lastly, the risk of losing products has been reduced or mitigated by diversification of markets international levels. Apple Inc. is trying to find new regions where they can do marketing and thrive, including Australia and Africa.

Try to estimate the company’s required rate of return or its cost of Capital

Cost of capital of apple Inc

= [{(Market value of debt / Total capital) * after tax cost of debt}] + [{(Market value of equity / Total capital) * after tax cost of equity}]

Cost of debt of apple inc. = [{$ 195.67 * (1 – 0.763)} / $666.55]

=  0.069

Cost of equity of apple Inc = (2.145 / 38.28) + 0.13

= 0.19

Therefore, cost of capital = $ 0.27

= $ 0.08

Discuss what causes the company’s stock price to change from 1 June 2018 – 31 May 2019the performance of the share prices of the company at market has been improved since June 20118 to May 31st 2019

Based on the above diagram the performance standards of shares of apple Inc. it is true that the company has capacity of attracting capital or even investing in the foreign market.

Better advancement opportunity.Management maintains strategies to ensure that the company has worked towards meeting the Apple mission. This has made the company have many sales all over the world. Making  apple Inc. very competitive . According to the reports on October 2018 the apple stock has fallen from 39% this is so painful to the investors .he apple management reported that the holiday quarter company sales were expected to be $84$ billion below the previous year estimate of $89 billion to $93billion.The Apple CEO, Tim Cook, explained that the slowing economy of China had played a role in having lower sales than expected. Tim also told that a strong dollar had been another reason for low sales, .and lastly; the rollout of the new Apple products in the market has also affected the stock sales. The company was also expecting a gross profit margin for the fiscal first quarter of 8%, which is lower as compared to the previous year, which was 38.4%. The Apple shares closed at $142.19 down 39% from an all-time intraday high of $233.47

Conclusion

The study mentioned the financial performance level of apple Inc. is improved over some time. This shows that as the company grows its shareholders, the new markets are being discovered every day. New products and ethical marketing strategies have been employed, making this company very competitive and active. As of now, Apple Inc. has increased the product base it deals with, other leading phone manufacture after Samsung. Its products are highly appreciated and respected in the market, which has resulted in making it have a higher earning level of the company. From the finding above, it is evident that the company focuses on expanding and thriving well in the market-beating their competitors this has made it reach Higher earning a level. The focus of the company is to produce quality products for all it has diversified products ranging from apple watches, tablets, iPhones, and iMac as well as iTunes, which are affordable to all.

Additionally, the company has a strategic way of risk monitoring and controlling. This is a wise way of mitigating the risk to the Apple Inc. business early in advance, making do well in financial performance. Through the use of proper financial strategies, there has been an increment of the company performance as it is reported in the company’s recent annual reports. According to the latest statistics, it is evident that the secure currency value has affected the cash flow of the company negatively.US dollar is strong, another problem associated with currency is the weak economy of some leading markets like China which negatively affects the apple sales and cash flows. Generally, Apple Inc. company financial reports show that it is capable of taking the lead in the market in all diversities and expanding to all parts of the planet.