On August 2, 2018, Apple, Inc. (APPL) was ranked third on Forbes Fortune 500 ranking as one of the biggest corporations in the US and the first to attain a market value of $1 trillion (Apple | 2021 fortune 500, 2021). This value enables people to see Apple’s growth and impact on the global economy presently. However, like any other corporation, apple must deal with problems and obstacles, the majority of which stem from the economic atmosphere. As a result, this article will not only examine Apple’s financial surroundings, but also it’s market framework, achievement, and worldwide influence.
There are various economic conditions that influence Apple corporation performance, such as political factors. The corporation’s level of political lobbying is an essential factor in Apple’s assessment. Political lobbying is an attempt to persuade legislators and the external ideological surroundings in ways that benefit the iPhone manufacturer. Over the past numerous decades, the corporation steadily increased its yearly political lobbying finances to USD 7,41 million in 2019 (Dudovskiy, 2021). Over time, the government of the United States improved overall trade initiatives emerge. This external tactical aspect expands Apple Inc.’s possibilities to disperse more of its brands globally. Notwithstanding these encouraging trends, the outer ideological component of market disagreements, especially between the United States and China, poses a threat to the company’s prospective expansion and international sales profits of its brands. (LOMBARDO, 2019).
The handling of utilized or damaged digital devices is Apple’s most significant ecological issue. Handling and disposing of devices, particularly those containing lithium batteries, could be costly. Because of concerns with such devices ending up in dumpsites, Apple corporation may be forced to bear that expense. Apple has benefited greatly from the global economy and technological advancement. For instance, Apple began as mainly an American corporation, but global trade has enabled the corporation to become an international enterprise. According to the financial statement, the corporation only gets about one-third of its profits from the Americas, which involves Canada and all of Latin America in addition to the US. The global economy has influenced Apple’s distribution chain as well. The corporation makes a lot of revenue since it can deliver brands at a low cost and then distribute them at a greater cost.
In Apple’s situation, there are several features that involve a market controlled by a few vendors and a few manufacturers with sufficient power to influence market valuation. Apple creates, produces, and sells a wide range of brands. In the mobile phone sector, Apple rivals with Samsung and Nokia, while in the computer business sector, they rival Dell and Sony, all of which can raise the market value. Each company’s market contribution is significant and related to each other. Throughout 2017, the Firm’s sales revenue through its internal and external supply chain outlets attributed for 28percent and 72percent of overall net profits, respectively.
In 2017, Apple’s interest rate was approximately 2.3 percent, which was approximately 9% lower than numerous other corporations in the business sector. This provided Apple with a significant benefit in terms of monetary well-being. Apple’s achievement stems from its capacity to deal with any external aspects that may threaten its financial status. They’ve developed a great group that can capitalize on possibilities in situations that would otherwise negatively impact the corporation. Apple can boost its revenue by selling in these international markets due to the elevated economic development rates of Asian nations. Higher expendable earnings, in turn, provide more possibilities to sell the firm’s comparatively high-priced innovation brands.
Uncertainty about international and local market conditions presents a risk because customers and enterprises may delay purchases due to stricter credit, economic market unpredictability, contractionary government initiatives, negative fiscal reports, and other considerations. The market may also vary from the corporation’s anticipations due to currency volatility, as the corporation raises rates on products and services marketed outside the United States. Other variables, such as joblessness, medical expenses, customer esteem, and other macroeconomic variables influencing customer expenditure habits, could, nevertheless, impact the global or regional market.
When comparing Apple’s financial findings from 2016 to 2017, the differences demonstrate how the corporation has enhanced its achievement year after year. The current ratio for that year is one example of such a transition. The current ratio is a liquidity ratio that quantifies a firm’s potential to compensate for short-term tasks. Apple corporation had a ratio of 1.23 at the end of 2016. In 2017, the corporation had a ratio of 1.24. While this is a minor growth, it shows that there has been progress from one year to the next.
At the end of 2016, current assets totaled $103.33 billion, while current liabilities totaled $84.13 billion. In 2017, the corporation revealed investments of $143.81 billion and liabilities of $115.79 billion (Macrotrends, 2019). According to the firm’s reviews, the return on assets was 13.83 percent in 2017 and 14.31 percent in 2016 (Macrotrends, 2019). As per the ROA, Apple corporation was marginally less lucrative in 2017 than it was in 2016. While the corporation’s profits were lower in 2017, their stock valuations increased during the same period. Apple’s PE ratio ended at 13.05 in 2016, and it ended at 16.63 in 2017 (Macrotrends, 2019). The upsurge in the PE ratio indicates that the corporation, while less lucrative in 2017, was traded at an elevated price than the preceding year. This indicates an upsurge in the market valuation of the corporation.
Conclusion
Like any other corporation, Apple experiences profit fluctuations from year to year. This is particularly true in the uncertain technology business sector. However, notwithstanding any declines in revenues from one year to another, Apple has proved a capacity to gain enhanced market valuation over the last ten years due to ongoing brand and procedure advancement within the corporation. As a result, it is still considered one of the best corporations to invest in.
References
Apple | 2021 fortune 500. (2021, May 27). Fortune. https://fortune.com/company/apple/fortune500/
Apple current ratio 2006-2021 | AAPL. (2019). Macrotrends | The Long-Term Perspective on Markets. https://www.macrotrends.net/stocks/charts/AAPL/apple/current-ratio
Apple PE ratio 2006-2021 | AAPL. (2019). Macrotrends | The Long-Term Perspective on Markets. https://www.macrotrends.net/stocks/charts/AAPL/apple/pe-ratio
Apple ROA 2006-2020 | AAPL. (2019). Macrotrends | The Long-Term Perspective on Markets. https://www.macrotrends.net/stocks/charts/AAPL/apple/roa
JESSICA LOMBARDO. (2019). Apple Inc. PESTEL/PESTLE Analysis & Recommendations. https://panmore.com/apple-inc-pestel-pestle-analysis-recommendations
John Dudovskiy. (2021, February 17). Apple PESTEL analysis. Research-Methodology. https://research-methodology.net/apple-pestel-analysis-4/
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