Apple Inc Case Study

Great Essays
Bahi Beshara
Apple’s Initial Public offering Week Five Assignment Finance 516

Outline
• Identify the company and its industry.
• Discuss important financial and other facts about the company from its SEC filings.
• How successful was the IPO in raising capital?
• What has happened to the company since the IPO?
• What is the trend in the stock price of the company since the IPO?

Identify the company and its industry: Apple Inc. is a multinational company which was established in 1976 by its founders Steve Jobs and Steve Wozniak and the company’s headquarter is located in Cupertino, California. The company specializes in manufacturing software, personal computers smartphones; it has also gained
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The financial statements are prepared with accordance with GAAP guidelines.
2. On June 2014, the company announced that its outstanding stock would split into 7 to 1 split with stock prices adjusted to reflect the stock split.
3. Net sales consists of revenue generated from selling products and revenue is recognized when customers order the product and the product is being shipped to them, if the company receive payments in advance it records that as deferred revenue.
4. Shipping and warrant cost are estimated and included in the cost of sales.
5. The Company has entered, and may enter in the future, into interest rate swaps to manage interest rate risk on the Notes. Such swaps allow the Company to effectively convert fixed-rate payments into floating-rate payments or floating-rate payments into fixed-rate payments. In the third quarter of 2014, the Company entered into interest rate swaps with an aggregate notional amount of $9.0 billion, which effectively converted the fixed-rate notes due 2017, 2019, 2021 and 2024 into floating-rate notes. In the third quarter of 2013, the Company entered into interest rate swaps with an aggregate notional amount of $3.0 billion, which effectively converted the floating-rate notes due 2016 and 2018 into fixed-rate
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initial public offering was supervised by underwriters Morgan Stanley and Hambrechet & Quist and occurred on December 12, 1980 trading under stock symbol AAPL for 22 dollars a share with total of 4.6 million shares outstanding raising 96.8 million. The IPO was considered the most successful to raise capital at that time since 1956. By the end of the day the stock price was 29 dollars which led to a market valuation of 1.778 billion dollars. Nowadays Apple has no preferred stocks issued and outstanding as of October 18, 2013, but with the increasing reserves of cash that Apple has on hand it would more likely to issue preferred stock including increased number of payouts to shareholders. Apple has a strong capital structure with only 0.38 debt to equity ratio if we excluded accounts payable, with the huge reserve of cash that Apple holds on hand of 160 Billion dollars, Apple has no problem meeting its short or long term obligations. Apple market capitalization is 639.33 Billion and with 33.691535 Million shares outstanding. Apple has $140 Billion dollars in cash reserves which would cover any short or long term debt if not it the company has to distribute some of the cash dividends for

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