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Comparison to industry ratios

As of now, the market capitalization of Apple Inc. lands on $115. 24 billion (Google Finance 2007). This comes next to Hewlett-Packard’s $121. 57 billion, and Intel Corporation’s $141. 21 billion (Google Finance 2007). As for P/E ratio, Apple Inc. lands on 37. 43 today, while Hewlett-Packard makes a mark on 18. 82, while Intel Corporation lands on 24. 84 (Google Finance 2007). Microsoft Corporation has P/E ratio that is 19. 83, which is also below Apple Inc. It appears that Apple Inc. ’s P/E ratio, even if it is negative by 32% from 2004 until 2006, did not harm the company this year.

Using the data presented by Reuters Corporate on Apple Inc. , which is Table 10 of the Appendix section on page 37, the following presents the statements discovered behind the company ratios and the industry ratios of Apple Inc. : P/E ratio of the company is 36. 03, while the industry’s lands on 31. 46. The company’s evaluation is higher than the industry’s when it comes to valuation ratios, except for Price to free cash flow where the company’s evaluation is 28. 22, while the industry’s evaluation lands on 29. 43.

Sales at 5-year growth rate are 29.

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21 for the company, while it lands on 20. 01 for the industry. The company’s evaluation is higher than the industry’s when it comes to growth rates, even when it comes to capital spending wherein the company lands on 23. 14, while the industry lands on 13. 72. Quick ratio of the company is 2. 65, while the industry’s lands on 2. 06.

The company’s evaluation is higher than the industry’s when it comes to financial strength, even when it comes to Current ratio wherein the company lands on 2.68, while the industry lands on 2. 56. Gross margin of the company is 33. 04, while the industry’s lands on 28. 42. The company’s evaluation is higher than the industry’s when it comes to profitability ratios; also when it comes to Operating margin wherein the company lands on 17. 49, while the industry lands on 11. 58. The same happens with Net profit margin wherein the company lands on 13. 85, while the industry lands on 9. 46. Return on assets is 17. 05 for the company, while the industry lands on 13. 06.

The company’s evaluation is higher than the industry’s when it comes to management effectiveness, except when it comes to Return on investments wherein the company lands on 25. 33, while the industry lands on 26. 35. Revenue/employee of the company lands on 1. 27 billion, while the industry’s lands on 1. 04 billion. The company’s evaluation is higher than the industry’s when it comes to efficiency, except when it comes to Asset turnover wherein the company lands on 1. 23, while the industry lands on 1. 64.

Compared to industry average, the company’s evaluation is most frequently higher than that of the industry average. This is because the industry average compares the company’s average with the rest of the other companies in the industry, so that the evaluation usually becomes lower, since the scope of the evaluation is wider and more complex and diverse. However, there are some exceptions to this, such as the Return on investments and the Asset turnover, wherein in both cases, the industry average is higher than the company average.

This is because, first, the Return on investments divides the Net profits by the Investment within a 5-year range, and if the company’s trend in deals and trading leans more on longer terms and investment, then the company’s evaluation for a five-year range of investment and equity would fall shorter than the industry’s average. When compared to other companies in the industry, Apple Inc. is more apt to longer terms and investments. The same thing happens with the Asset turnover wherein the industry average is higher than the company’s.

Because Assets turnover is directly related to Return on investments, then a big drop on the investments would also affect the assets in the company average. The evaluation in the industry average is higher because, even if the assets and the investments of Apple Inc. landed on lower grounds, when compared to the whole industry, it still is on the brighter side of the ground. Analysts believe that Apple Inc. has brighter future for the upcoming years.

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