Question

1- Discuss Finance/Accounting for Apple's company (Provide information about at least three financial ratios to describe strengths and weaknesses)?

2- Discuss at least (three) of the following possible alternatives for Apple's company (Make a case for why these are selected as possible alternatives.)

(a. Concentration b. Market development c. Market penetration d. Product development e. Backward vertical integration f. Forward vertical integration g. Horizontal integration h. Diversification – related or unrelated i. Retrenchment j. Divestiture k. Harvest l. Bankruptcy m. Merger n. Acquisition o. The joint venture, p. Strategic alliance.)?

Answer 1

1) The financial performance of Apple can be identified by analysing various financial ratios. Ratio analysis would help in identifying the strengths and weaknesses of the company by gaining insight about its liquidity, profitability and operational efficiency from studying various items from its financial statements.

· Current ratio of Apple Inc has increased in 2019 from its previous year due to the tendency of the organization to horde cash. This ratio indicates Apple’s ability to manage its operational risk by meeting its short-term obligations with the help of its current assets. While a higher current ratio is beneficial for the company, it must also remember to utilize its assets efficiently.

· Fixed asset turnover ratio of the company has also increased from the previous year. This ratio identifies the ability of the company to generate revenue from its fixed investments like property, plant and equipment. The increase in the ratio indicates that Apple has been efficiently utilizing its fixed assets like equipment and factories as compared to the previous year.

· However, the net profit margin of Apple has decreased from the previous year. This ratio indicates the amount of profit or income generated as a percentage of revenue in a given year. The decline in the profit margin indicates that the company’s performance and profitability levels have deteriorated as compared to the previous year. Thus, Apple needs to revise its cost structure and pricing strategies for improving the profit margin in future years.

2) Three marketing strategies suitable for Apple would be market penetration, product development and diversification.

· Market penetration refers to the strategy that an organization adopts for penetrating an existing market and establishes itself further in the market. Apple has established itself in the industry by selling its products or services for a long time. This strategy would help the company in selling more products to the customers who are already aware of its high-quality goods and services. This, in turn, would further increase the market share of the company in places where it has a relatively lesser presence.

· Product development refers to the strategy of introducing new products in the existing markets. Apple can use its brilliant designing for developing various products in satisfying the changing demands of the customers in the market. This strategy is useful in keeping up with the changing technology in the industry. Furthermore, it is easier for the company to sell new products in the market as it consists of loyal customers. This would also help in increasing the profit margins and improve financial performance.

· Diversification refers to the strategy of selling new products in new markets. Apple consists of a strong and loyal customer base with a worldwide presence. Thus, it will be easier for the company to venture into new markets and offering them its new products. As customers across various countries are aware of the strong international presence and brand name of the company, advertising the products will be easier. Furthermore, the high quality of existing goods and services of Apple will attract customers from the new market. This, in turn, will increase its market share and revenues.

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