Apple Inc.: An Application of Financial Analysis, 2003–2018

11 Pages Posted: 7 Jan 2019 Last revised: 12 Apr 2019

See all articles by Paul J. Simko

Paul J. Simko

University of Virginia - Darden School of Business

Abstract

Since its launch out of a garage in 1976, Apple Inc. had transformed from a computer-manufacturing company to the undisputed leader in diversified consumer electronics and media. Unparalleled financial performance along almost every metric followed, and in September 2018, Apple's market capitalization topped $1 trillion, the first time a US publicly traded company reached that mark. Using the company's financial statements, this case provides a longitudinal view of Apple over 2003–2018. Using these data, students can perform a variety of financial analyses in order to assess how Apple has evolved over time. These include computations of traditional analysis metrics (e.g., ROE and gross margin), but also critical valuation inputs (e.g., free cash flow and implied terminal growth). This case is used at Darden in the second-year Financial Statement Analysis course. It would also be suitable in earlier accounting and finance courses, and even executive education programs, wherein the objective is to review financial statements and discuss critical financial metrics.

Excerpt

UVA-C-2420

Rev. Apr. 10, 2019

Apple Inc.: An Application of Financial Analysis, 2003–2018

Quality is much better than quantity. One home run is much better than two doubles.

—Steve Jobs, 1955–2011

As of 2018, Apple Inc. had been one of the best-known companies in the world for over four decades, unarguably reaching iconic status. Steve Jobs, Apple's deceased cofounder and CEO, was widely regarded as one of the elite group of visionaries whose ideas and products significantly changed the world. Since its launch in a garage in 1976, with handmade personal computers as its first product offering, the company had adapted and innovated, staying true to creating unique, high-quality electronic devices that carried mass appeal. Over the years, Apple had transformed from primarily a computer-manufacturing company to the undisputed leader in diversified consumer electronics and media. Unparalleled financial performance along almost every metric followed. Since 2003, total sales had increased over 20 times. Profit margins more than doubled. And in September 2018, Apple's market capitalization topped $ 1trillion, the first time a US publicly traded company reached that mark.

. . .

Keywords: Apple, Steve Jobs, computer, financial accounting, financial statements, valuation, financial statement analysis

Suggested Citation

Simko, Paul, Apple Inc.: An Application of Financial Analysis, 2003–2018. Darden Case No. UVA-C-2420. Available at SSRN: https://ssrn.com/abstract=3310469

Paul Simko (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-1391 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/simko.htm

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