Possible Assignment two walk through

You are to prepare an evaluation of Apple Inc.

The aim of the case study is to evaluate the strategic financial management of the company.

You should identify and explore the factors that have affected the current development and financial position of Apple Inc and evaluate the future potential for growth and change. (76 marks : 2,280 WORDS)

It is expected that you will apply a strong academic framework using the Grundy 11 stage process (see below for details) and employing numerical data extracted from the company accounts to sustain your analysis.

1.0 introduction to Apple.

1. Short introduction and what Apple is and what Apple does
2. Elaborate on the current strategy of Apple
3. Suggest what the financial situation of Apple is currently
4. Show the share price chart of Apple
5. Relate the share price to the sales revenue using the Return on Equity relationship (This is to justify the relationship between the business lifecycle and the share price history chart)
6. Revenue generated by each major business area

2.0 Impact of strategic decisions

1. Evaluate what the strategic direction of Apple is
2. Review its mission statement, vision, corporate objectives are aligned with the strategic direction taken by business units
   1. Review the five-year record for the major balance sheet items
   2. Review the director’s highlights
   3. Are there any conclusions that you can make?

3. Assess how the strategic decisions have impacted Apple’s finances

1. Compute financial ratios
   1. Income statement ratios
      1. Review the trend of the financial ratios
      2. Are there any conclusions that you can make?
         1. What caused the change in performance?
         2. What would the future impact be of those changes?
      3. Statement of financial position
         1. Review the trend of the financial ratios
         2. Are there any conclusions that you can make?
            1. What are the financial strengths and weaknesses?
            2. What caused the change in performance?
            3. What would the future impact be of those changes?
         3. Cash flow statement
            1. Review the cash flow statement
            2. Are there any conclusions that you can make?
            3. What caused the change in performance between last year and this year?

3.0 Future prospects of Apple

1. Synthesize the future prospects of Apple
   1. Future valuation of the company
      1. Compute the free cash flow to firm by using the past 2 to 3 years to extrapolate to the next five years forward.
         1. Are there any conclusions that you can make?
         2. What caused the change in performance?

2. Computing the appropriate discount rate
   1. Decide on appropriate formula
      1. WACC
      2. Return on Equity (Ke)
   2. Compute WACC or Ke

3. Compute the NPV of the company based on constant growth stage
   1. Assume holding period
   2. Assume discount rate

4.0 Suggest if you think the prospects of Apple are good or bad with supporting evidence.

Total word count: +/- 2,800 words