FIN515 Week 3 First Course Project
FIN515
Course Project One
Apple Inc.
Apple Incorporated is a leading company in technology. Apple has created and reimagined technology to what we use today. Easy to use, educational and simple tools to enjoy the things we love- from watching movies to creating our own music- is what Apple has created in the technology being sold today. iMacs, iPods and iPhones are only a few of the lineup that Apple sells today in its stores.
Apple is a Cinderella story that has continued to show consumers a happy ending. For those who have invested in Apple, they have definitely received their return on equity (or ROE). But how much did these investors receive in return from their investment? Let 's use the DuPont Identity formula. This formula uses all aspects of a company 's ownership; Balance Sheet items e.g. Assets & Liabilities and Income Statement items. This formula produces the ROE by the Net Profit Margin times Asset Turnover times Equity Multiplier (Berk 44). This may seem confusing so let 's break it down further:
Net Profit Margin (NPM) = Net Income/ Sales
Asset Turnover (AT) = Sales/ Total Assets
Equity Multiplier (EM) = Total Assets/ Book Value of Equity
Then, you multiply the Net Profit Margin by the Asset Turnover by the Equity Multiplier and that gives you the DuPont Identity 's ROE.
Using the 2014 fiscal year, ending September 27th, the ROE consists of the following (in millions of US Dollars):
NPM= 39,510/ 182,795 = 0.21614377
AT= 182,795/ 231,839 = 0.78845664
EM= 231,839/ 111,547 = 2.07839745 When multiplying each result, the DuPont Identity shows that for the fiscal year 2014, Apple stockholders have earned 35% return. In theory, just looking at the numbers is great but it has no real value as a stand alone percentage. In order to make an analysis, there must be a minimum of two things being compared. To give Apple 's 2014 ROE more meaning, it will be presented against Apple 's 2013 ROE.
NPM= 37,037/ 170,910 = 0.2167047
AT= 170,910/ 207,000
Course Project One
Apple Inc.
Apple Incorporated is a leading company in technology. Apple has created and reimagined technology to what we use today. Easy to use, educational and simple tools to enjoy the things we love- from watching movies to creating our own music- is what Apple has created in the technology being sold today. iMacs, iPods and iPhones are only a few of the lineup that Apple sells today in its stores.
Apple is a Cinderella story that has continued to show consumers a happy ending. For those who have invested in Apple, they have definitely received their return on equity (or ROE). But how much did these investors receive in return from their investment? Let 's use the DuPont Identity formula. This formula uses all aspects of a company 's ownership; Balance Sheet items e.g. Assets & Liabilities and Income Statement items. This formula produces the ROE by the Net Profit Margin times Asset Turnover times Equity Multiplier (Berk 44). This may seem confusing so let 's break it down further:
Net Profit Margin (NPM) = Net Income/ Sales
Asset Turnover (AT) = Sales/ Total Assets
Equity Multiplier (EM) = Total Assets/ Book Value of Equity
Then, you multiply the Net Profit Margin by the Asset Turnover by the Equity Multiplier and that gives you the DuPont Identity 's ROE.
Using the 2014 fiscal year, ending September 27th, the ROE consists of the following (in millions of US Dollars):
NPM= 39,510/ 182,795 = 0.21614377
AT= 182,795/ 231,839 = 0.78845664
EM= 231,839/ 111,547 = 2.07839745 When multiplying each result, the DuPont Identity shows that for the fiscal year 2014, Apple stockholders have earned 35% return. In theory, just looking at the numbers is great but it has no real value as a stand alone percentage. In order to make an analysis, there must be a minimum of two things being compared. To give Apple 's 2014 ROE more meaning, it will be presented against Apple 's 2013 ROE.
NPM= 37,037/ 170,910 = 0.2167047
AT= 170,910/ 207,000
References: 1. Berk, J.;DeMarco, P. "Corporate Finance". 3 ed. Copyright 2013. 2. Sony Corporation. "Financial Section". March 2014. Retrived from http://www.sony.net/SonyInfo/IR/financial/ar/2013/shr/pdf/FinancialData_E.pdf 3. Apple Incorporated. "Apple Inc.-Annual Report". October 2014. Retrived from http://investor.apple.com/secfiling.cfm?filingID=1193125-14-383437&CIK=320193#D783162D10K_HTM_TOC783162_21