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Apple and Microsoft

Two Tech Giants


By: Breanna Koliba 5/5/16 1rst hour

Apple Inc.
Apple is an American company founded on
April 1, 1976. But it is not Aprils fool joke
and has since become one of the most
successful companies worldwide. The
company started out with Steve Jobs, Steve
Wozniak, and Ronald Wayne (though he
sold his share of the company early in the
stages of Apples development).
Apple is named after Jobs countless visits
to apple orchards. He lived on a fruitarian
diet for portions of his life. This is where the
name Apple originates from. With their
inception also came a simple goal. They
wanted to make a user friendly computer.
They began in Cupertino, California and this
is where the headquarters still rests.
Their mission statement still reflects that
goal today, Apple designs Macs, the best
personal computers in the world, along with
OS X, iLife, iWork, and professional
software. Apple leads the digital music
revolution with its IPods and ITunes store.
Apple has reinvented the mobile phone with
its revolutionary IPhone and App store, and
is defining the future of mobile media and
computing devices with IPad.
Its safe to say they have a lot of confidence
in their brand. The real question is: should
you?

Microsoft (Corporation)
Microsoft is an American company founded
on April 5, 1975. They began as just Bill
Gates and Paul Allen. They believed the
world needed software that made it easier to
use computers. At the time, the
microprocessor was just invented. This
inspired Paul Allen to name their company,
Microsoft.
The company began small in Albuquerque,
New Mexico, but has expanded and now
rests in Redmond, Washington. The
companys main focus is their operating
system, Windows.
Since its inception, Microsoft has become a
leading company in America and is well
known for their computers, tablets, game
console, and Microsoft Office. However,
even with its advancement they still have the
same goal, At Microsoft our mission and
values are to help people and businesses
throughout the world realize their full
potential.
With Windows 10 on the rise and new
advancements around the corner, its easy to
see why these two are in competition. Which
one is more deserving of the attention?

Apple is traded on the National Association


of Securities Dealers Automated Quotations
(Nasdaq) for $93.64 (Closing price on
5/2/16)

Microsoft is traded on the National


Association of Securities Dealers Automated
Quotations (Nasdaq) for $50.61 (Closing
price on 5/2/16)

Apple Inc.

Microsoft

Assets

Assets

Sept. 27, 2014

231,839,000,000

June 30, 2014

172,384,000,000

Sept. 26, 2015

290,479,000,000

June 30, 2015

176,223,000,000

Increase of:

58,640,000,000

Increase of:

3,849,000,000

Source: Apple Annual Balance Sheet (Yahoo Finance)

Source: Microsoft Annual Balance Sheet (Yahoo Finance)

Increasing Assets?
Increase of assets can be a positive attribute. If cash is increasing it means the company is
gaining new funds to use for future growth. However, this can be bad too. If cash is seeing
continually high numbers, without spending, the company may not be using its cash effectively.
Or in contrast, if the cash amount is dwindling this can predict company hardship. Both
companies have increasing assets (though by far Apple has outdone Microsoft) which is a good
sign of growth.

Liabilities

Liabilities

Sept. 27, 2014

120, 292,000,000

June 30, 2014

82,600,000,000

Sept. 26, 2015

171,124,000,000

June 30, 2015

96,140,000,000

Increase of:

50,832,000,000

Increase of:

13,540,000,000

Source: Apple Annual Balance Sheet (Yahoo Finance)

Source: Microsoft Annual Balance Sheet (Yahoo Finance)

Increasing Liabilities?
Every good company has debt but they are able to pay. Debt is okay and even better if it is
lowering overtime. A good indicator is also how assets measure to liabilities. For example, if there
are more assets than liabilities, thats a good thing. If liabilities are higher than assets, the
company may not be able to pay its bills.

Equity
Equity
Sept. 27, 2014
Sept. 26, 2015
Increase of:

June 30, 2014

89,784,000,000

June 30, 2015

80,083,000,000

Decrease of:

7,808,000,000

111,547,000,000
119,355,000,000
7,808,000,000
Source: Microsoft Annual Balance Sheet (Yahoo Finance)

Source: Apple Annual Balance Sheet (Yahoo Finance)

Increasing Equity?
Increasing equity can also be the sign of a healthy company, but its not the end of the world if
equity decreases either. Equity increased when there is more investment and sales. It also
decreases when dividends are paid out or if there are net losses (expenses being more than sales).
Microsoft may not be in any trouble. They may have just paid out dividends.

Assets = Liabilities + Equity


This should be true for any company thats recording their financial activities properly. If they
dont equal, there is an issue in calculations or they may
be some
Microsoft
2014fraud involved.
Apple 2014
Total Assets

231,839,000,000

Total Liabilities

120,292,000,000

Total Equity

111,547,000,000

Equity + Liabilities

231,839,000,000

Total Assets

172,384,000,000

Total Liabilities

82,600,000,000

Total Equity

89,784,000,000

Equity + Liabilities

172,384,000,000

Microsoft 2015
Apple 2015
Total Assets

290,479,000,000

Total Liabilities

171,124,000,000

Total Equity

119,355,000,000

Equity + Liabilities

290,479,000,000

Total Assets

176,223,000,000

Total Liabilities

96,140,000,000

Total Equity

80,083,000,000

Equity + Liabilities

176,233,000,000

Revenue and Net Income/Loss


.

2014 (Sept. 27)

(Gross) Revenue

182,795,000,000

Net Income

39,510,000,000

Apple Inc.

2015 (Sept. 26)

Microsoft

(Gross) Revenue

233,715,000,000

Net Income

53,394,000,000

Source: Apple Annual Income Statement

2015 (June 30)


(Gross) Revenue

93,580,000,000

Net Income

12,193,000,000

Source: Microsoft Annual Income Statement

Both companies have seen an increase in revenue and their overall profit. This is a sign of growth
and increased sales. A company increasing its sales is in the green. Their profit (or net income) is
also increasing which means they are continually making back the money spent in expenses
(exceeding it) and have profit. If theres more profit, then there can be more money reinvested in
the company to improve and continue growth.

Apple Inc.

Statistics

2014

2015

23%
29%

21%
30%

52%

59%

1.08
.17
53.18

1.11
.18
59.64

32.6%

43.84%

Apple Return on Equity Chart


Apple Annual Income Statement
Apple Annual Balance Sheet (Yahoo Finance)

Microsoft

Year
Profit Margin
Operating Profit
Margin

Debt Ratio
Current Ratio
Return on Assets
Inventory
Turnover
Return on
Equity

2014

2015

25%
32%

13%
19%

48%

55%

2.5
.13
10.18

2.5
.07
11.38

26.1%

13.70%

Microsoft Return on Equity Chart


Microsoft Annual Income Statement

Sources

Microsoft Annual Balance Sheet (Yahoo Finance)

Performance Review

2014 (June 30)


(Gross) Revenue

86,833,000,000

Net Income

22,074,000,000

Apple Inc.
Overall, Apple is progressing
wonderfully as a company and I think they
will continue to grow as strong as they have
in the years to come. Their inventory
turnover is huge and thats good. (Its a
companys ability to sell its inventory).

Investors will be happy to know their stock


value has only been increasing and the faith
they put in Apple is to be trusted. They have
a very normal (and health) amount of debt
for a growing company and can be relied on
to pay what they owe.

Where should I invest?

Microsoft

Over the course of this study, Ive seen that Apple is a major contender and more than deserving of
Though Microsoft is a bit smaller (or
the attention. As a company, they are a tank on the market and should not be ignored. They have only
a lot smaller) they have their own small
shown growth and I highly recommend them as an investing choice. Holding some of their stock for the
success. In 2014 they were booming and
long run could be one of the smartest decisions we make. They sell their inventory quickly, with high
moving strong into a new generation of
profits and returning an extra 10% to their shareholders in 1 year alone.
computers and consumers. For unknown
reasons, however, their values and strength
has diminished. The stock value has only
Microsoft is a bit of a different story. Beloved asdecreased
they are, itand
is clear
that this
a rough
one should
beiswary
of patch for
them and their stock is losing value and has been since the
end of 2014.
TheTheir
gap between
the two years is
purchasing
a share.
sales decreased
practically insurmountable and Id say this stock is a risky
one to have.
10%strong
in their profit
dramatically
butTheyve
they stilllost
show
margin and in shareholders equity. They wont go underability
as a company
to cover (and
debtswho
and knows
sell offmaybe
their theyll
even bounce back), but dont outright buy tons of Microsoft
stock. Buying stock should take heavy
inventory.
consideration and approached with caution. Focus more attention on Apple than Microsoft.