MBA 604 Financial Analysis Project
By:
Yasir Rashid, Omar Alaqeel, Ronald Davis, Laurie Davis, & Darren
Southard
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Apple Inc. formally known as known as Apple Computer Inc. was
founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne
Apple Inc. dropped the word computer in 2007 to reflect the
company’s expansion into consumer electronics market in addition
to its traditional focus personal computers
Apple Inc. is a American multinational corporation which
manufactures and designs consumer electronics & software products
Apple Inc. sells its products worldwide through its online stores , its
direct sales force, third party wholesalers ,and resellers
Hardware products include: Macintosh computers, iPod, iPhone
Software products include: Mac OS X Operating system, iTunes
media, iLife creativity software products, iWork
Apple generated nearly 33 billion in revenue in 2008
Apple competitors: Dell Inc., Hewlett-Packard Company, and
Microsoft Corp.
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Microsoft corporation was
founded in 1975 by Bill Gates and
Paul Allen
Multinational computer
technology corporation which
develops, manufactures, licenses,
and supports a wide range of
products for computing devices.
Microsoft hardware products
include: Xbox, Xbox 360,
Mouse/keyboards and Zune.
Microsoft software products
include: Microsoft windows,
Microsoft Office (i.e. Excel,
PowerPoint, Word, etc.), PC/Xbox
software games
Microsoft generated 61.98 billion
in revenue in 2008
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Earnings Per Share
(EPS)=Net Income/No. of
Shares outstanding
Q1 (12/2008) EPS:
1605.00/890.42 = $1.80
Q4 (09/2008) EPS:
1136.00/888.33 = $1.28
Annual EPS (09/2008):
4,834.00/888.33 =
$5.44
Apple (Ticker: AAPL)
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Q2 (12/2008) EPS:
4,174.00/8,889.00 =
$0.47
Q1 (09/2008) EPS:
4,373.00/8,977.00 =
$0.49
Annual EPS (06/2008):
17,681.00/9,151.00 =
$1.93
Microsoft (Ticker: MSFT)
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Price Earnings
Ratio=Market Price Per
Share/Net Income Per
Share
Q1 (12/2008) P/E:
$85.35/1.81 = 47.2
times
Q4 (09/2008) P/E:
$113.66/1.28 = 88.8
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Q2 (12/2008) P/E:
$19.44/0.47 = 41.4
times
Q1 (09/2008) P/E:
26.29/0.48 = 54.8
Annual P/E (06/2008):
19.44/1.87 = 10.4
Annual P/E (09/2008):
$113.66/5.04 = 20.7
Apple
Microsoft
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Book value Per Share=Total
Shareholders Equity/Total
outstanding shares
Q1 (12/2008) BVPS:
19,878.00/890.42 =
$22.32
Q4 (09/2008) BVPS:
21,030.00/888.33 =
$23.67
Annual BVPS (09/2008):
21,030.00/888.33 =
$23.67
Apple
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Q2 (12/2008) BVPS:
34,478.00/8,889.00 =
$3.88
Q1 (09/2008) BVPS:
33,594.00/8,977.00 =
$3.74
Annual BVPS (06/2008):
36,286.00/9,151.00 =
$3.97
Microsoft
Apple
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Sept. 2008 – Q4
Microsoft
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 SG&A = (999.00 * 1,000,000) /
 Revenue = (7,895.00 * 1,000,000)
 = 0.1265 * 100 = 12.65%
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Dec. 2008 – Q1
 SG&A = (3,931.00 * 1,000,000) /
 Revenue = (15,061.00 * 1,000,000)
 = 0.2610 * 100 = 26.10%
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 SG&A = (1,091.00 * 1,000,000) /
 Revenue = (10,167.00 * 1,000,000)
 = 0.1073 * 100 = 10.73%
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Year Ending Sept. 2008
 SG&A = (3,761 * 1,000,000) /
 Revenue = (32,749 * 1,000,000)
 = 0.1148 * 100 = 11.48%
Sept. 2008 – Q1
Dec. 2008 – Q2
 SG&A = (4,493.00 * 1,000,000) /
 Revenue = (16,629.00 * 1,000,000)
 = 0.2702 * 100 = 27.02%
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Year Ending June 2008
 SG&A = (18,166 * 1,000,000) /
 Revenue = (60,420 * 1,000,000)
 = 0.3007 * 100 = 30.07%
Apple
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Sept. 2008 – Q4
 Revenues = (7,895 * 1,000,000) /
 Avg. Quarterly Assets = ((39,572 *
1,000,000) + (31,709 * 1,000,000))
/2
 = 35,640,500,000
 Asset Turnover = 0.22
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Dec. 2008 – Q1
 Revenues = (10,167 * 1,000,000) /
 Avg. Quarterly Assets = ((42,787 *
1,000,000) + (39,572 * 1,000,000))
/2
 = 41,179,500,000
 Asset Turnover = 0.25
Microsoft
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Sept. 2008 – Q1
 Revenues = (15,061 * 1,000,000) /
 Avg. Quarterly Assets = ((65,117 *
1,000,000) + (72,793 * 1,000,000))
/2
 = 68,955,000,000
 Asset Turnover = 0.22
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Dec. 2008 – Q2
 Revenues = (16,629 * 1,000,000) /
 Avg. Quarterly Assets = ((65,786 *
1,000,000) + (65,117 * 1,000,000))
/2
 = 65,451,500,000
 Asset Turnover = 0.25
Apple
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Sept. 2008 – Q4
 Cost of sales = (5,022 * 1,000,000) /
 Avg. Quarterly Inventory = ((509 *
1,000,000) + (545 * 1,000,000)) / 2
 = 527,000,000
 Inventory Turnover = 9.53
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Dec. 2008 – Q1
 Cost of sales = (6,477 * 1,000,000) /
 Avg. Quarterly Inventory = ((396 *
1,000,000) + (509 * 1,000,000)) / 2
 = 452,500,000
 Inventory Turnover = 14.31
Microsoft
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Sept. 2008 – Q1
 Cost of sales = (2,263 * 1,000,000) /
 Avg. Quarterly Inventory = ((1,640 *
1,000,000) + (985 * 1,000,000)) / 2
 = 1,312,500,000
 Inventory Turnover = 1.72
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Dec. 2008 – Q2
 Cost of sales = (3,275 * 1,000,000) /
 Avg. Quarterly Inventory = ((968 *
1,000,000) + (1640 * 1,000,000)) /
2
 = 1,304,000,000
 Inventory Turnover = 2.51
Apple
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Sept. 2008 – Q4
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Current Assets = (34,690 * 1,000,000) /
Current Liabilities = (14,092 * 1,000,000)
= 2.46
Sept. 2008 – Q1
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Current Assets = (35,163 * 1,000,000) /
Current Liabilities = (14,757 * 1,000,000)
= 2.38
Year Ending Sept. 2008
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Current Assets = (34,690 * 1,000,000) /
Current Liabilities = (14,092 * 1,000,000)
= 2.46
Dec. 2008 – Q1
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Microsoft
Dec. 2008 – Q2
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Current Assets = (37,202 * 1,000,000) /
Current Liabilities = (24,383 * 1,000,000)
= 1.53
Current Assets = (37,730 * 1,000,000) /
Current Liabilities = (23,710 * 1,000,000)
= 1.59
Year Ending June 2008
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Current Assets = (43,242 * 1,000,000) /
Current Liabilities = (29,886 * 1,000,000)
= 1.45
Profit margin of 36%:
Profit margin of 80%:
Gross margin(3,690) /
Net sales revenues (10,167)=
0.362
Gross margin /
Net sales revenues 13354 / 1
6629 = 0.803
Return on assets of 3.75%:
Net income (8547) + interest
(1-Tax rate) / Total assets (
65,786)
=
8547 + 195.00(mil)(1-0.26) /
65,787= 0.13
Apple (Q1)
Microsoft (Q2)
Net income (1,605) + interest
(1-.30) / Total assets (42,7
87)
=
1,605+(1-.30)/42,787= .037
5
Return on assets of 13%:
Return on common equity
Of 7%:
Net income (1,605) /
Shareholders’ equity (22,909)
= 0.07006
Cost of goods sold (6,477)/
sales (10,167)
= 0.637061 (64%)
Apple (Q1)
Return on common equity
of 12%:
Net income (8,547) /
Shareholders’ equity (34,478)
= 0.1214
Cost of goods sold (3,275)/
sales (16,629)
= 0.196945 (20%)
Microsoft (Q2)
Ratio Comparisons
Annual 2008
Apple
Microsoft
Profit margin of 35%:
Net Income(11618) /
Net sales (32479)=
.35
Profit margin of 84%:
Net Income (50878) /
Net sales (60420)
= .84
Return on assets of 29%:
Net income (11618) + interest (1-Tax
Rate <.30>=0.74) /
Total assets (39572)
= 0.29
Return on assets of 24% :
Net income (17681) + interest
195 (1-Tax rate<.26>=0.74) /
Total assets (72793)
=0.24
Return on common equity
Of 23%:
Net income (4834) /
Shareholders’ equity (2103
0)
= 0.229
Cost of goods sold (20861)
/
sales (32479)
= .642 or 64%
Apple
Return on common equity
Of 49%:
Net income (17681) /
Shareholders’ equity (3628
6)
= 0.487
Cost of goods sold (9542)/
sales (60420)
= 0.157 or 16%
Microsoft
Apple Inc
Common Size Income Statement
QTR Ending
Net sales
Dec-08
Percent of
Sep-08
10,167.00
Net sales
7,895.00
Percent of
Net sales
Cost of sales
6,477.00
63.71%
5,022.00
63.61%
Gross Margin
3,690.00
36.29%
2,873.00
36.39%
R&D
SG&A
Operating income
Depreciation
Op income W/DP
Other Income
Income Before Tax
Tax
Income After Tax
315.00
298.00
1,091.00
999.00
2,284.00
22.46%
158.00
2,126.00
20.91%
1,442.00
18.26%
140.00
22.46%
679.00
1,605.00
19.96%
134.00
158.00
2,284.00
1,576.00
1,582.00
20.04%
446.00
15.79%
1,136.00
14.39%
Items as percent of net sales (in millions)
Microsoft Corp
Common Size Income Statement
QTR Ending
Net sales
Dec-08
Percent of
Sep-08
16,629.00
Net sales
15,061.00
Percent of
Net sales
Cost of sales
3,275.00
19.69%
2,263.00
15.03%
Gross Margin
13,354.00
80.31%
12,798.00
84.97%
R&D
2,290.00
2,283.00
SG&A
4,493.00
3,931.00
Operating income
Depreciation
Op income W/DP
6,571.00
39.52%
632.00
5,939.00
6,584.00
585.00
35.71%
5,999.00
Other Income
-476.00
-215.00
Interst Income
175.00
207.00
Income Before Tax
5,638.00
Tax
1,464.00
Income After Tax
4,174.00
43.72%
33.90%
5,991.00
39.83%
39.78%
1,618.00
25.10%
4,373.00
29.04%
Items as percent of net sales (in millions)
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1.Liabilities/assets
=Total Liabilities/Total Assets.
Q1=19,878.00
/42,787.00=0.46
Q4=18,542.00
/39,572.00=0.47
Q2=31,308.00/65,786.00 =0.47
Q1=31,523.00/65,117.00=0.48
2.Dept/Equity
=Total Liabilities/Shareholders’ equity.
Q1=19,878.00/22,909.00=0.
86
Q4=18,542.00/21,030.00=0.
88
Q2=31,308.00/34,478.00=0.90
Q1=31,523.00/33,594.00=0.94
3.Long Term Debt/Assets ratio.
1.Acid-test (Quick)
=(Current Assets - Inventory)/Current Liabilities.
Q1=(35,163.00-396)/14,757.00=2.36
Q4=(34,690.00-509)/14,092.00=2.42
Q2=(37,730.00-968.00)/23,710.00=1.55
Q1=(37,202.00-1,640.00)/24,383.00=1.45
2.Days’ Receivables
=Accounts Receivable/(Sales/365).
Q1=2,196.00/(10,167.00/365)=78
Q4=2,422.00/(7,895.00/365)=111
Q2=10,953.00/(16,629.00/365)=240
Q1=9,535.00/(15,061.00/365)=231
Depreciation Method:
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Apple & Microsoft both utilize straight line method of depreciation.
Depreciation is computed principally on the straight-line method over the
estimated useful lives of the assets.
Inventory Method:
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Inventories are stated at the lower of cost, computed using the
first-in,
first-out method, or market. If the cost of the inventories exceeds their
market value, provisions are made currently for the difference between the
cost and the market value. The Company’s inventories consist primarily of
finished goods for all periods presented.
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Apple 10K report revealed that the auditors
(KPMG) opinion is Unqualified opinion on
the consolidated financial statements.
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Apple
SG&A = 11.48%
Asset Turnover (Q1)= 0.25
Inventory T/O = 14.31 (Q1)
Current Ratio = 2.46
(Earnings Per Share =
$5.44)
P/E = 20.7
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Microsoft
SG&A = 30.7%
Asset Turnover (Q1)= 0.25
Inventory T/O= 2.51 (Q2)
Current Ratio = 1.45
(Earnings Per Share =
$1.93)
P/E = 10.4
Apple, Inc. References:
1)
Apple, Inc., Annual Balance Sheet Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=AAPL&sid=609&report
=2&freq=1
2)
Apple, Inc., Annual Income Statement Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=AAPL&sid=609&report
=1&freq=1
3)
Apple, Inc., Quarterly Income Statement Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=AAPL&sid=609&report
=1&freq=2
4)
Apple, Inc., Quarterly Balance Sheet Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=AAPL&sid=609&report
=2&freq=2
Microsoft, Inc. References:
5)
Microsoft, Inc., Annual Balance Sheet Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=MSFT&sid=3140&repor
t=2&freq=1
6)
Microsoft, Inc., Annual Income Statement Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=MSFT&sid=3140&repor
t=1&freq=1
7)
Microsoft, Inc., Quarterly Income Statement Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=MSFT&sid=3140&repor
t=1&freq=2
8)
Microsoft, Inc., Quarterly Balance Sheet Retrieved May 9, 2009, from
http://www.marketwatch.com/tools/quotes/financials.asp?symb=MSFT&sid=3140&repor
t=2&freq=2
Ratio Definitions:
9)
Selling, General & Administrative Expense, Retrieved May 9, 2009, from
http://www.investopdeia.com/terms/s/sga.asp
10)
Asset Turnover, Retrieved May 9, 2009, from
http://www.investopedia.com/terms/a/assetturnover.asp
11)
Inventory Turnover, Retrieved May 9, 2009, from
http://www.investopedia.com/terms/i/inventoryturnover.asp
12)
Current Ratio, Retrieved May 9, 2009, from
http://www.investopedia.com/terms/c/currentratio.asp