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Apple Inc.

Accounting Project

By: Ryan Lynagh, Nick Quaid. and Andrew Chunka

Background

Apple is a multinational corporation that creates consumer electronics, personal computers, computer software, and commercial servers, and is a digital distributor of media content.

Steve Jobs and Steve Wozniak created Apple Computer on April 1, 1976 and incorporated the company on January 3, 1977 in Cupertino, California.

With the introduction of the successful iPod music player in 2001 and iTunes Music Store in 2003, Apple established itself as a leader in the consumer electronics and media sales industries, leading it to drop "Computer" from the company's name in 2007.

Background Continued..

As of 2012, Apple is the largest publicly traded corporation in the world by market capitalization, with an estimated value of US$626 billion as of September 2012.

Apple Inc.'s Market cap is larger than that of Google and Microsoft combined.

Background Continued..

Fun Facts

Apple has over 80,000 employees worldwide

Apple sold 340,000 iPhones per day in 2012

Apple earns $300,000 US dollars per minute

Everything said to Siri is sent to Apple and stored

Apple’s auditors are Ernst & Young LLP.

Formula for Success

Strategy to achieve greatness: Apple is a product based company. They believe there product induces a universal approach. Living through the Apple products is obtainable by the common man.

Having the reputation Apple does, it allows them to expand their product line and gives them an opportunity to enter the market place already with a plan. They come to the market with there product and already expect results.

Separates Good from Great

What makes a company special is the way they build their brand loyalty.

The research shows how the iPhone has commanded more loyalty at the top of the market, even as Google’s operating system continues to outpace the competition overall. Samsung customers were more likely to be entering the smartphone market for the first time, with 37% switching from a basic device, compared to 26% of Apple customers.

Key Components

Products:

iPhone 6 $199.00 - $299.00

iPad $499.00 - $699.00

iMac (Home Computer) $1,099.00 - $1,499.00

-MacBook Pro/Air (Laptops) $899.00 - $1,199.00

iPod (Various generations)- Varies

Apple Watch- debuted in stores April 24th

Apple Sales

The Bigger Picture

Goals: “Our goal, in a nutshell, is to obtain stellar products and services within tight timeframes, at a cost that represents the best possible value to our customers and shareholders. If that sounds like a daunting task, it’s the same one we assign ourselves.” – Apple Website Mission Statement

Provide top quality, and expect top dollar. Each Apple store wants to provide individual care.

Top Competitors

Hewlett-Packard Co.- global provider of products, technologies, and software such as HP Computer Products, etc.

Intel Corp.- designs and manufactures digital technology platforms, which consist of a microprocessor and chipset, hardware, software, and services.

Oracle Corp.- develops, manufactures, markets, hosts and supports database and middleware software, application software, cloud infrastructure, hardware systems and related services, engineered to work together in cloud-based technology environments.

Top Competitors Continued..

Apple’s major competition when it comes to computers are Dell, Hewlett-Packard (HPQ), Acer and Lenovo.

Apple competes with companies like Samsung, Sony, HTC, Lenovo, and many others in the mobile phone industry.

Dominance on a whole new level

Apple’s Market Cap vs. Corporate Giants

Where the Money Comes From

iPhone Accounting Issue

In 2010, the FASB changed their rules allowing cellular providers to book revenue when a product is sold, rather than booking it as revenue and profit from sales over time.

This allowed Apple accountants to receive cash from iPhone sales immediately, rather than over the 2 years each customer is under contract of the phone.

Effects of Rule Change

Sales were immediately boosted the following quarter to $15.7 billion, from an expected $12.1 billion

Total Assets dropped $6.4 billion

Total Liabilities dropped $10.1 billion

Added $3.8 billion to Shareholder Equity

Balance Sheet

Budget

Summary of Cash Flows

Net Operating Cash Flow- $59.71 billion

Net Investing Cash Flow- $22.58 billion

Net Financing Cash Flow- $37.55 billion

According to Apple’s 2014 Statement of Cash Flows

Source Page

"Apple Facts: 26 Facts about Apple You Didn't Know.”. N.p., n.d. Web. 22 Apr. 2015

“Apple Inc.” Mergent Online. Web. 22 Apr. 2015.

Apple Inc. Q1 2015 Unaudited Summary Data (n.d.): n. pag. Web.

Phillips, Matt. "Apple Earnings: The IPhone Accounting Issue." MarketBeat RSS. N.p., n.d. Web. 22 Apr. 2015.

The End