I need a Financial and Risk Management overview for Apple. The overview describes the financial situation of Apple. It includes an analysis of the present situation (2016 or 2015 depending on what data is available to you) together with a capital budget, operating budget and general thoughts on the health of the company, any glaring issues?
Thank you for your question about the financial and risk management overview for Apple. The most helpful sources I found to answer your question are Apple and Motley Fools. The short answer is that Apple is in a very robust state financially. The company is very healthy, with capital expenditure increasing from $11.2 billion in 2015 to $12.8 billion in 2016. The capital expenditure for 2017 is expected to be to $16 billion. Below, you will find a deep dive in this answer.
I searched through Apple's database, industry reports, trusted media reports and industry analysis. I focused on the most recent data I could find and compared the numbers with the previous year's number to understand how the company is doing. In addition, I searched for critics and alternative views on the financial health of Apple to gain a more robust position of Apple currently and in the future.
About 6 years ago, Apple's capital expenditure was $2 billion, however, at the end of 2016, the company spent $12.8 billion on capital expenditure and it expects to spend $16 billion in 2017. The capital expenditure is important because it shows future projects are being planned and that growth in sales and production are expected. According to Katy Huberty of Morgan Stanley, Apple's increasing spend on CapEx is not just increasing capacity but directly driving revenue growth. According to Motley Fools, Apple's capital expenditure provides a competitive advantage as it allows Apple to pursue new manufacturing processes that its competitors cannot afford.
In terms of cash flow, Apple posted a quarterly revenue of $46.9 billion in the last quarter of 2016 and a net income of $9 billion. Although this figure fell short of the 2015 last quarter of $51.5 billion. This was partly due to the depressed sales of iPhone 7. However, sectors like its Service business grew by 24%, setting a new record. They also generated a record $16.1 billion in operating cash flow in the last quarter of 2016.
Apple paid $9.3 billion dollars to investors in 2016 through dividends and share repurchases in the last quarter. And they paid $15 billion to investors in the first quarter of 2017. The total amount paid to investors now stands at $200 billion.
Apple posted a record quarterly revenue of $78.4 billion, an all-time record, for its fiscal 2017 first quarter. This represents an increase from the $75.9 billion it earned in the first quarter of 2016. It also announced that international sales accounted for 64% of all its earning. It's also significant that although the $16 billion Apple intends to spend in capital expenditure in 2017 is huge for a mobile phone company, it's less than 20% of its first quarter cash flow in 2017. This means that Apple is a very profitable company that has little reinvestment needs.
Apple also reported a 5% growth in unit sales in the first quarter of 2017, reversing 3 quarters decline in sales. Based on current excitement among consumers in anticipation of iPhone 8, analysts at Morgan Stanley believe that iPhone 8 sales will be successful and may even surpass that of the hugely successful iPhone 6.
Apple's stock gained 20% in 6 months and it's currently up by 0.89% in NASDAQ.
Some experts feel that Apple's dominance and growth may be disrupted as Artificial Intelligence matures because it has been left too far behind by players such as Amazon and Google. Some experts believe that as the smartphone market matures, the iPhone's unit sales growth is unlikely to be sustained.
Here is the spreadsheet containing the numbers mentioned in this response.
To conclude, based on my research, Apple is in a very healthy state financially and continues to grow. Its capital expenditure also signals that it would remain a leader in its field for years to come.
Here is a spreadsheet of the numbers.
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