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Investment Analysis And Recommendation Paper For Apple Inc

5828 words - 24 pages

Investment Analysis Paper on Apple Inc.
Elijah Clark
Walden University

Investment Analysis Paper on Apple Inc.
Apple Inc. (Apple) is a registered publicly traded company established in 1977 and is currently headquartered in Cupertino, California (Apple Inc., 2015a). The company’s products and services include mobile communication and media devices, portable digital music players, personal computers, software, accessories, services, networking solutions, and third-party digital content and applications. The company sells its products and digital services worldwide through online media, direct sales force, retail stores, through third-party wholesalers, and cellular network carriers. The ...view middle of the document...

With the exception of the CEO, all Board members are independent under the rules of NASDAQ and SEC (Apple Inc., 2015a). The Board committees include: (a) Audit and Finance Committee, responsible for overseeing accounting, and reviewing financial transactions and risk management (Apple Inc., 2015a); (b) Compensation Committee, responsible for analyzing compensation arrangements for the executive officers, CEO, and Board (Apple Inc., 2015a); (c) Nominating Committee, responsible for assisting the Board in making recommendations concerning members, processes, and overseeing corporate governance (Apple Inc., 2015a); and (d) Governance Committee, which advise and recommend matters to the board of directors.
Strengths and Weaknesses of Board Structure
Though Apple does have a Governance Committee in place, the board of directors has strengths and weaknesses. From the perspective of the Audit Committee, it has a primary responsibility to oversee risk management at the enterprise level (Apple Inc., 2015a). Having the Audit Committee only monitoring the enterprise level leaves the Nominating Committee and Compensation Committee responsible for managing their audits. It would be beneficial to have the Audit Committee oversee all company audits so that there are no ethical concerns within each department.
Ethical Concerns
Apple manufactures many of its products in countries with differing labor standards where the company has less direct oversight (Apple Inc., 2015a). To solve this, Apple’s corporate governance provides national and international employees with a Business Conduct Helpline to report misconduct to the Audit Committee and Finance Committee (Apple Inc., 2015a). Apple encourages ethical behavior by providing its employees, officers, and Board with a code of ethics (Apple Inc., 2015a). The code is available on the company’s website.
Competitive Financial Ratio Comparison
Apple’s major competitor is Microsoft Corp. (Microsoft). Microsoft offers products including operating systems for computing devices, servers, phones, video games, online advertising, software, management tools, and other intelligent devices (Microsoft Corporation, 2014). Apple and Microsoft are publicly traded companies and compete within similar markets (Apple Inc., 2015a; Microsoft Corporation, 2014). The selected financial ratio comparison in Table 1 shows the annual financial statements of Apple (Apple Inc., 2015a) and Microsoft (Microsoft Corporation, 2014).
Table 1
Apple and Microsoft Selected Financial Information for 2014, 2013, and 2012 (in millions)
Apple | Year 2014 | Year 2013 | Year 2012 |
Net income | $39,510 | $37,037 | $41,733 |
Revenue | $182,795 | $170,910 | $156,508 |
Assets | $231,839 | $207,000 | $176,064 |
Equity | $111,547 | $123.549 | $118,210 |
Microsoft | Year 2014 | Year 2013 | Year 2012 |
Net income | $22,074 | $21,863 | $16.978 |
Revenue | $86,833 | $77,849 | $73,723 |
Assets | $172,384 | $142,431 | $131,271 |
Equity | $89,784 | $78,944...

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