Evaluating_Financial_Health

In assessing the risk associated with investment oportunities with Apple, Inc. we find the liquidity provides us with information that proves Apple to have the ability to meet their short-term obiligations with a healthy current ration of 2.74 in 2009 which is an improvement from 2008 of 2.46 with a industry standard of 2.5. This industry reflexts a low computer equipment inventory count which is why the acid test ratio is slightly below the current ratio. The acid test ratio is 2.7 for 2009 compared to 2.43 in 2008. We can compare the acid test in 2009 of 2.7 with the industry average of 2.5 (msn.com, 2010). The statement states that the risk avoider would be happy to look at the satisfactory liquidity position. The solvency risk for Applie shows a debt equity ratio of 0.11 for 2009, showing an increase from 2008 of 0.08. Here it is important to refer to theindustry average of 0.07 (OnlyHardwareBlog.com, 2010). Proving it not alarming for Apple, Inc. to uphold more long-term risks. Since the company exmpanded the firm due to the increase of sales, the requirement of cash increase in 2009 as well. Operations generated $1.11 billion improving 5.87% from the previous year. The company invests in marketable securities that improve their liquidity and also give the room to meet the need of raw inventory. The cash flow from Apple, Inc. shows that the company takes a tax benefit from stock base benefit and keeps sufficient cash on hand as well as not announcing any dividends in cash. Apple, Inc’s major comepetors are Dell & HP. If we compare Apple, Inc. with these competitors, Applie, Inc. shows a higher price earning ratio (19.10) than Dell and HP. The price per share is booked at 5.71 times which is proven again to be higher than the 4.1 times Dell is producing and the 1.38 that HP is producing. Though it is not completely pressent in the United States, the Global economic recession is showing recovery. Reasonable growth is observed in markets in Brazil, Malaysia, India and China. The global economy has a possiblity of reflecting two different patters. The “V” shaped pattern or the “U” shaped patter. I feel that Apple, Inc. in this race should focus on the growth of their market in India and China to expand on their companies growth and work on their profitabiltiy. If Apple, Inc. were to exploit more oportunities outside the United States, I believe the company will benefit. I feel the growth outside the United States is key to the progess of Apple, Inc. References Electronista. (2010). Apple only US computer builder to outgrow industry average. Retrieved July 2, 2010, from http://www.electronista.com/articles/10/06/04/isuppli.sees.apple.at.34pc.world.market.share/ Hardware Marketplace. (2010). Computer Hardware. Retrieved July 2, 2010 from http://www.hardwaremarketplace.com/computer-hardware/ msn.com. (2010). Apple Inc: Key Ratios. Retrieved July 2, 2010 from http://moneycentral.msn.com/investor/invsub/results/compare.asp'Page=PriceRatios&Sy mbol=AAPL OnlyHarwareBlog. (2010). Highest debt to equity ratio in the computer hardware industry detected in shares of international business machines. Retrieved July 2, 2010 from http://onlyhardwareblog.com/'p=2107