Fuad Suleymanov

City University of Seattle

Financial Fundamentals for Mgrs

Vicky Nie

12/06/2022
1. The company I will choose is Apple. As per my investigation, APPLE has paid a
quarterly dividend since 2012.

2. Apple Inc (Apple) designs, manufactures, and markets smartphones, tablets, personal
computers (PCs), and portable and wearable devices. The company also offers software
and related services, accessories, and third-party digital content and applications. Apple’s
product portfolio includes iPhone, iPad, Mac, iPod, Apple Watch, and Apple TV. It
offers various consumer and professional software applications such as iOS, macOS,
iPadOS, and watchOS, iCloud, AppleCare, Apple Pay, and accessories. Apple sells and
delivers digital content and applications through Apple Store, App Store, Apple Arcade,
Apple News+, Apple Fitness+, Apple Card, Apple Pay, and Apple Music. The company
has a business presence across the Americas, Europe, the Middle East, Africa, and Asia-
Pacific. Apple is headquartered in Cupertino, California, the US.

3. Below we can see Apple’s profitability ratios.

Apple’s profitability rations and return on sales we can find below.

 Gross profit margin
Gross profit margin indicates the percentage of revenue available to cover operating and
other expenditures.
Apple Inc. gross profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.
Operating profit margin
A profitability ratio is calculated as operating income divided by revenue.
Apple Inc. operating profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.
Net profit margin
An indicator of profitability is calculated as net income divided by revenue.
Apple Inc. net profit margin ratio improved from 2020 to 2021 but then slightly deteriorated
from 2021 to 2022.

ROE
A profitability ratio is calculated as net income divided by shareholders’ equity.
Apple Inc. ROE improved from 2020 to 2021 and from 2021 to 2022.
ROA
A profitability ratio is calculated as net income divided by total assets.
Apple Inc. ROA improved from 2020 to 2021 and from 2021 to 2022.
 2022 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales = 100 × 170,782 ÷ 394,328 = 43.31%

Gross profit margin

Gross profit margin indicates the percentage of revenue available to cover operating and
other expenditures.
Apple Inc. gross profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.
 2022 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales = 100 × 119,437 ÷ 394,328 =
30.29%

Operating profit margin

A profitability ratio is calculated as operating income divided by revenue.
Apple Inc. operating profit margin ratio improved from 2020 to 2021 and from 2021 to 2022.

2022 Calculation
Net profit margin = 100 × Net income ÷ Net sales = 100 × 99,803 ÷ 394,328 = 25.31%
 Net profit margin
An indicator of profitability is calculated as net income divided by revenue.
Apple Inc. net profit margin ratio improved from 2020 to 2021 but then slightly deteriorated
from 2021 to 2022.

2022 Calculation
ROE = 100 × Net income ÷ Shareholders’ equity = 100 × 99,803 ÷ 50,672 = 196.96%
 ROE
A profitability ratio is calculated as net income divided by shareholders’ equity.
Apple Inc. ROE improved from 2020 to 2021 and from 2021 to 2022.

2022 Calculation
ROA = 100 × Net income ÷ Total assets = 100 × 99,803 ÷ 352,755 = 28.29%

ROA
A profitability ratio is calculated as net income divided by total assets.
Apple Inc. ROA improved from 2020 to 2021 and from 2021 to 2022.
4. Growth and value are not usually separate ideas. Value stocks are distinguished by
trading based on fundamental research at what seems to be a discounted price. The key
indication in this situation, as you indicated, is that AAPL is a terrific company trading at
what looks to be a low multiple based on one way of fundamental analysis.
If the question is whether a value-oriented investor would purchase Apple for their
portfolio, the answer is that it is and has been for some time a value firm. They are
appropriate for inclusion in a value portfolio because of their size, size-related P/E
multiples, and demonstrated market share in personal computers. However, a growth
fund would probably be able to invest in Apple as well given that company's considerable
involvement in emerging regions (wireless computing in particular).

5. Major risks faced by the Apple.

Artificial intelligence and virtual/augmented reality are two topics that will have an
influence on many different things, and most of the big tech companies are investing
heavily in both fields. It will become more obvious exactly how this will develop when
consumers of the things start to utilize them.

When Apple loses focus and neglects to invest in cutting-edge technology as Microsoft
did with smartphones, that poses the greatest risk. Despite being a leader in this industry,
Microsoft did not try to develop a product that users would want to use.

Like the app store, Apple will need to be able to observe and track its fortunate hits. Due
to the failure of other, comparable marketplaces, Apple did not believe that this one
would be successful.
 References

Apple Inc. (NASDAQ:AAPL) | Analysis of Profitability Ratios. (n.d.). Stock Analysis on Net.

https://www.stock-analysis-on.net/NASDAQ/Company/Apple-Inc/Ratios/Profitability#Ratios-

Summary

Green, S. (2016). Apple. Bellwether Media, Inc.