Managers are often responsible for the financial transactions and planning of a company. In Week 1, you selected a Fortune 500 company. This company will be referred to as “your company”.
As the new manager working for the Chief Operating Officer (COO) of the Fortune 500 company, you want to review historical financial information to be fully informed of your company’s business valuation so you can provide guidance on near future financial decisions. You decide to put together a presentation on your company’s financial performance that assesses the cash flow, valuation, and KPIs for financial stability that you will present at the next management meeting. Your ultimate plan is to write a financial plan that will lead to future company growth.
Assessment Deliverable
Using your selected company and research from Week 1, create an 8- to 10-slide presentation to assess the company’s financial growth and sustainability.
Identify 2 key performance indicators.
Relate the stock price to price-to-earnings ratio.
Explain the market capitalization. What is the market capitalization for the Fortune 500 company?
Identify trends in stock price, dividend payout, and total stockholders’ equity. Relate recent events or market conditions to the trends you identified.
Determine, based on your analysis, whether you think the organization is going to meet its financial goals, describe the outlook for growth and sustainability, and explain why you do or do not recommend this stock for purchase and how your recommendation compares to that of other analysts. For example, if you suggest buying, you need to explain why other analysts say sell.
Cite references to support your assessment according to APA guidelines. Use the APA Template in the Writing Center if you write a paper. The APA Template is in Microsoft Word. Use the Sample PowerPoint in the Writing Center if you write a presentation. And include speaker notes with each slide except the title and reference pages.
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The Fortune Magazine compiles and publishes an annual list that consists of 500 corporations in the US. Therefore, for this assignment, the selected Fortune 500 Company is Apple Inc. which is a registered American multinational company that has played a significant role in the technology revolution mostly in the last two decades with innovations in areas such as smartphones, portable tablets, computer software, and computer peripherals. This company has grown significantly and it has employed numerous employees, the ticker symbol for Apple Inc. is AAPL. The significance of the ticker symbol in the stock exchange market is that it plays a vital role in company identification, thus, traders can easily identify Apple Inc. stocks in the market.
Price-to-Earning (PE) Ratio
This financial measurement is important for every company operating on the New York Stock Exchange Market (NYSE), the major role of the PE ratio is to evaluate the current share price of the company relative to its per-share earnings. The current PE Ratio according to Apple Inc. (AAPL) Financial Ratios and Metrics (n.d.) is 33:72, this ratio shows how much each investor who is willing to invest in Apple Inc. shares is willing to pay per dollar of their earnings and with higher ratios, the figures show that investors are expecting the company t significantly grow in the future.
Stock Dividends and Yield
In 2012, Apple Inc. resumed paying its dividends after altering the process for 17 years, for the last ten years, the company has recorded steady growth in earnings which has resulted in increases in annual dividends paid. According to Wei (2022), as of the first quarter of 2022, Apple Inc. was paying $0.22 per share on the quarterly dividend which translated to a 0.55% dividend yield. In 2021, the company paid a total of $14.4 billion in dividends and the payout ratio was 15.2% of the 94.7 billion net income. These dividends are payments made by the company as profit distribution to its shareholders and the payout ratio shows that the dividends proportion paid out.
Earnings per Share
This is a very crucial metric in a company because it shows the proportion of a company’s profit that is allocated to each member as an outstanding share of the company’s common stock. Earnings per share serve as an indicator of Apple Inc.’s profitability since these are net earnings of the company or the losses that are attributed to the company shareholders, they are convertible to securities. According to Apple EPS (2024), in the quarter ending March 31, its EPS was $1.53 which was a 0.66% increase year-over-year. Other EPS is $6.13 in 2023, $6.11 in 2022, and $5.61 in 2021 which represented 0.33%, $8.91, and 71.04% increases in 2022, 2021, and 2020 respectively.
Revenue Estimates
The above metrics show that Apple In. has been performing well in the last three years, reporting positive figures each year, looking at the first quarter which ended in March 2024, this year looks promising and the total sales are expected to grow in the next twelve months. The company has had a steady growth in revenue and in the next twelve months this growth is expected to reach $441 billion with the next quarter in September alone expected to generate $92.93 billion.
Apple Inc. Revenue from the Last Three Years
Apple like many other companies was hit by the COVID-19 pandemic, however, in 2021, the company regained its track and recorded $378.32 billion which was a 28.62% increase from the previous year (Apple (AAPL) Revenue, 2024). In 2022, the revenue increased by 2.44% to $387.53 billion, unfortunately, in 2023, a loss of 0.47% resulted in a reduction in revenue to $385.70 billion (Apple (AAPL) Revenue, 2024).
Statement of Cash flows
These statements are vital in a company because they provide members of the public with insights into the cash the company has generated in the last few years and how it has used this cash in its operations, investments, and financing of any other activities. The information on statements of cash flows obtained from the company’s core businesses was found on sec.gov.
Operating Activities
This refers to the organization’s cash that was generated from the main business activities such as selling products and services. The following financial report from Apple Reports Fourth Quarter Results (n.d) shows that in 2020, Apple generated $80.67 billion from its operating activities, in 2021 there was a significant change in the income generated from operating activities from $80 billion to $104.04 billion and in 2022 this number also changed with significant growth, the company reported $122.15 billion cash generated from its core business operations.
Investing Activities
Apple Inc. has numerous investments globally which generate significant amounts of income. This income also comes from other companies partnered or affiliated with Apple Inc. and the cash flow from 2020 to 2022 has been steady. In 2020, investing activities generated $4.87 billion, this was significantly low compared to 2021 when the company generated $13.38 billion, and a further increase was reported in 2022 with investing activities generating $19.89 billion (Apple Reports Fourth Quarter Results, n.d).
Financing Activities
Apple Inc. also generates funds from transactions with its creditors or shareholders, from 2020, this cash flow has been increasing, in 2020, the company generated $86.05 billion from financing activities, and in 2021, there was a $14 billion increase from the previous year resulting to $100.68 billion and in 2022, there was another $13 billion increase to $113.69 billion (Apple Reports Fourth Quarter Results, n.d).
Average Trade Volume
The average trade volume refers to the number of shares that Apple Inc. averagely trades per day for a certain period which is important in indicating the liquidity of the company’s stock. According to Apple’s 30-day Average Daily Volume Insights from June 01 to July 01, 2024, the company recorded an average daily volume of 75.48 million shares trade daily.
Current Stock Price, 52-Week High, and 1-Year Estimated Stock Price
Apple’s current stock price as of July 2, 2024, is $218.98, over the last 52 weeks the highest price in which Apple Inc. traded was $220.96. Although the company experienced a low of $164.08, the stock price is expected to hit $240.00 by the next year.
Recommendation
According to Stock Analysis (n.d.), those who wish to invest in Apple Inc. stock should hold or buy more stock.
Apple Inc.’s Market Cap
As of today, Apple Inc.’s market cap is at $3.36 trillion making it one of the most valuable companies in the world.
Overall, these financial metrics were important in providing the comprehensive performance and financial health of Apple Inc. for investors wishing to make decisions on investing in the company.
References
Apple Inc. (AAPL) Financial Ratios and Metrics. (n.d.). Stock Analysis.
Apple EPS
– Earnings per Share 2006-2019 | AAPL. (2019). Macrotrends.net.
Apple (AAPL) – Revenue. (2024). Companiesmarketcap.com.
Apple Reports Fourth Quarter Results
Document. (n.d.). Www.sec.gov.
Apple 30-Day Average Daily Volume Insights
| YCharts. (n.d.). Ycharts.com. Retrieved July 2, 2024, from
Stock Analysis (n.d.).
Apple Inc. (AAPL) Financial Ratios and Metrics.
Wei, J. (2022, April 6).
AAPL: Apple Dividend Analysis. Investopedia.
