This paper analyzes Apple’s annual report for the fiscal year 2014 (Apple, 2014). Apple’s total assets were approximately $231.84 billion during the fiscal year 2014 which was nearly $25 billion more than the 2013 figure of $207 billion. Total assets are important because they help us understand the size of the company. A close look at the total assets also provides important hints such as short term liquidity and inventory management.
In 2014, Apple had cash and cash equivalents of approximately $13.84 billion which was slightly below the 2013 figure of approximately $14.26 billion. The 2014 cash reserves show Apple is still sitting on huge pile of cash and has strong short term liquidity status. This slight decline in cash reserves from 2013 to 2014 may also be a positive trend as Apple might have found attractive long term investments in 2014 to which it decided to allocate more resources because cash earns little if any returns.
As far as accounts payable is concerned, Apple had approximately $30.2 billion in accounts payable during the fiscal year 2014 which was significantly higher than the 2013 amount of approximately $22.37 billion. While a higher accounts payable figure is not surprising because Apple’s total sales were also higher in 2014 as compared to 2013, the size of increase does raise concerns. Apple’s management should take steps to pay its suppliers more promptly because it will help the company enhance suppliers’ loyalty which is only more important in the face of rising competition. Prompt payments may also qualify the company for discounts and improve its profitability.
Apple’s net revenues for the years 2012, 2013, and 2014 were approximately $156.51 billion, $170.91 billion, and $182.8 billion, respectively. This is quite impressive as despite its huge size and rising intensity of competition, Apple still managed to consistently achieve higher sales during the period. But this increase in sales has also benefitted from more competitive prices because the company’s gross profit margin declined from 2012 to 2014. It is clear that while the company continues to be a strong performer, competitive pressure has been taking a toll on its pricing power.
Apple’s net income was approximately $37.04 billion in the fiscal year 2013 which increased to approximately $39.51 billion in the fiscal year 2014. In other words, company’s net income increased by approximately $2.47 billion from 2013 to 2014. This is a positive outcome given the fact that the company’s net income actually declined from 2012 to 2013 even though net revenues were higher in 2013. Even the 2014 net income falls below the 2012 net income figure of approximately $41.73 billion.
As far as current assets are concerned, Apple’s current assets declined from approximately $73.29 billion in 2013 to approximately $68.53 billion in 2014. Much of this decline probably resulted from the company’s decision to move resources from short-term marketable securities to long-term marketable securities. If true, this might have been a wise move as long-term marketable securities generate higher returns. Nonetheless, the company continues to sit on huge pile of cash, thus, its short term liquidity position is still strong.
The above information has value for a diverse range of stakeholders. The investors may be interested in the company’s growth indicators, its liquidity position, and its competitive indicators such as profit margins. Employees may study income statement and balance sheet to determine operating efficiency and profitability among other things. The management may also examine balance sheet and income statement for various purposes such as determining sales trend, liquidity, profitability, inventory management, and viability of existing capital structure.