Apple Inc Shareholder Analysis

Apple Inc Shareholder Analysis

Apple Inc. is a global leader in electronics brands like computers and mobile phones. Founded in 1976 by Steve Jobs and partners, the company has been at the forefront of good performance, as indicated by the quality of products, market size, and revenue margins. Shareholders maintain high stakes in Apple Inc. because of its growth trend and return on investment. The company has a limited product line despite possessing innovative technology designs. However, this product line comprises competitive products such as Mac, Apple Watch, iPhone, and Music. According to Dave (2018), Apple Inc. had over $250 billion in cash reserves in 2017 and became the largest publicly traded corporation globally based on market capitalization. In the same year, the company was ranked 4^th on Fortune 500 list with a market value exceeding $1 trillion. This excellent performance was notably due to various political, environmental, currency, economic, and government influences, as discussed in the next part.

Economic Conditions Influencing the Company’s Performance

Apple Inc.’s brand is renowned globally, and as a result, the economic conditions around the globe influence the company’s processes and Apple’s performance. Notably, the various economic factors affecting the commission include the rapid growth in developing countries, increasing disposable incomes among target consumers, stability of developed economies, recession, currency, and inflation. In detail, inflation reduces the purchasing power of individuals, which in turn negatively affects the company’s sales. However, all other economic issues identified influence Apple Inc. positively (Li, 2021). For instance, higher disposable incomes among consumers increase opportunities for the company to sell their relatively high-priced technology products. The same happens with rapid growth among developing countries and economic stability among developed countries.

Apple Inc.’s activities are significantly affected by political actions. The company is likely to make more sales and conduct its revenue-generating activities more easily in environments of political stability. However, the opposite is true because political instability is negatively associated with good company performance. Other significant political issues for the company include trade disputes and free trade policies that offer the company an opportunity to access most markets globally. For instance, when the United States government improves policies on trade, the company gains. Notably, this indicates the government’s influence on the company’s functions.

Further, the government can influence the activities of the company through regulations. When the rules increase costs for businesses, earnings are reduced. Environmental factors have also influenced the company’s activities whereby it has committed to promoting a good company sustainability trend.

Comparing Market Conditions with the Company’s Performance For 2017

Apple Inc. performed excellently in 2017, having a market reserve of $250 billion. The exemplary performance was achieved based on various factors. A significant factor was favorable market conditions, such as political, technological, and economic factors. Further, the economic conditions were good in the national and global markets. According to Kolmakov et al. (2018), market conditions refer to the appeal given by the overall market to firms to conduct their business activities. Specifically, the market conditions that favored the operations of Apple Inc. included economic growth, Federal Reserve Bank monetary policy changes, market demand, and interest rate changes. For instance, when interest rates increase, market conditions change. When they fall, companies and people access loan funds quickly to spend on Apple’s products. When interest rates go high, the opposite happens, whereby few people access money loans to spend on products.

The monetary policy implemented by the Federal Reserve Bank comprises four crucial tools. They include interest on reserves, discount rates, reserve requirements, and open market operations. When rates are kept high, spending by businesses and consumers goes down because lending is discouraged. On the contrary, lower rates improve companies’ performance due to increased spending, which encourages lending. Further, it is noted that economic growth is indicated by the value of output or activity in the economy, and high economic growth is often associated with increased company performance. Remarkably, the excellent financial performance of Apple Inc. was significantly contributed by economic growth across its markets.

Analyzing Year-Over-Year Performance from 2016 And 2017

The company’s performance in 2017 improved from 2016, as indicated by metrics established from the company’s financial statements. When the year-to-year performance is observed based on reported revenue, there was an increase from $217 billion in 2016 to $229.2 billion in 2017. Notably, the change represents an improvement in the performance of 6.3%. When the performance is reflected based on the P/E ratio, the value for the metric was 16.38 in 2017 and 13.13 in 2016. Accordingly, this indicates a positive difference of 13.2% across the two years.

Further, Apple Inc.’s PB ratio in 2016 was 4.52 and 5.76 in 2017, indicating an increase in performance by 27.4%. The company recorded a 7.1% increase in the return on assets ratio across the two years, whereby the value for the metric was 14.9% in 2016 and 13.9% in 2017 (Al Mheiri et al., 2021). Only the return on equity indicated an insignificant decline across the two years; the metric value was 36.9% in both years. Overall, Apple Inc. performed excellently in 2017 than in 2016.

References

Al Mheiri, R., Al Hosani, N., & Saif, E. (2021). Ratio Analysis of Apple. Available at SSRN 3895231.

Dave, J. G. (2018). A Case Study on Marketing Strategy: Apple i-Phone. IJRAR-International Journal of Research and Analytical Reviews (IJRAR), 5(4), 106-114.

Kolmakov, V., Ekimova, K., Ordov, K., Aliev, A., & Tchuykova, N. (2018). Monetary policy influences companies’ competitiveness through credit channels. European Research Studies, 21, 614-623.

Li, Y. (2021). Apple Inc. Analysis and Forecast Evaluation. Proceedings of Business and Economic Studies, 4(4), 71-78.

ORDER A PLAGIARISM-FREE PAPER HERE

We’ll write everything from scratch

Apple Inc. Shareholder Analysis

Research your company’s financial reports for 2017.

Complete a 2- to 3-page FAQ/Shareholder Analysis.

Evaluate economic conditions that influence company performance. Consider political, environmental, currency (money), global economics, and government influence on economic conditions.

Compare market conditions with the company’s performance for 2017. Conclude how the year’s market conditions influenced the company’s performance, such as interest rates, Federal Reserve Bank monetary policy changes, or other market conditions relevant to the company you selected.

Analyze year-over-year performance from 2016 and 2017. Consider key metrics or ratios such as trailing PE ratio, forward PE ratio, price to book, return on assets, and return on equity in your conclusions.

Cite references to support your assignment.
Format your citations according to APA guidelines.