Financial Comparison Of Apple Inc. And Google Inc.

1692 words - 7 pages

The Securities and Exchange Commission requires that publicly owned businesses provide annual reports, which are available to the public. Many different people use annual reports, to make informed business decisions. Management from the company uses the information to determine a number of items. Some of these items are the profitability of the company, the inventory turnover rate, and the accounts receivables rate. Creditors use the annual report to determine how well a company can satisfy its current liabilities, as well as, how the company is doing in the aspect of long tem survival. Another group of people who use the annual reports furnished by companies are the investors, who can purchase shares of stock from the publicly company. Annual reports are very important to these people, because they are an over all picture to help them determine the over all stability and reliability of the company’s financial outlook. These annual reports are important because they do not only contain the financial statements of the company, but there is a management ‘s note to discuss reasons for any unexpected numbers, and an auditor’s report, from an independent accounting firm, who either agrees or disagrees with the financial numbers. Market reporter Matt Krant said, “Ignoring these reports is akin to driving down the freeway blindfolded.”
Recently, many companies have struggled during the economic downturn. Many investors have lost money in their investments. Usually during an economic crisis people invest in government bonds, health care, and commodities. However, the two companies being compared are in the industry of technology, which amazed many investors when both companies continued to make record-breaking growth during recent economic times. Apple Inc. is the maker of iPhone, iPad, iPod, iMac, MacBook, icloud digital storage and various different software applications. Google started out as a search engine website, but they have created other websites including digital storage. They also make Google Nexus, and have recently purchased Motorola to become more competitive in the cellular phone area of technology; they already are one of the top leaders with their open source operating system Android.
First, the management looks the financial statements to compare this year to the previous year. This will help them to determine if the company is being run more or less efficiently. In the case of Apple Inc., 2012 had better numbers than 2011, the gross profit rate increased from 40.5% in 2011 to 43.9% in 2012. Google, however, had a 65.2% gross profit rate in 2011 that decrease to 58.9% in 2012. Managers also look at accounts receivables turnover and collection times, this number represents how long it takes a company to collect its accounts receivables after a sale has been made. Apple Inc. has a relatively quick collection period of 19.0 days on accounts receivables. Google, on the other hand, has a much longer collection time if 52.74 days....

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