Microsoft vs Apple financial ratios Essay

2847 Words Apr 5th, 2015 12 Pages
Apple Incorporated vs. Microsoft Corporation
A Financial Analysis of Competitors
Alex Trenchovska
Columbia College

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Apple Incorporated vs. Microsoft Corporation
A Financial Analysis of Competitors

In modern society, electronics are used on a daily basis. Virtually everyone has a smartphone that they carry with them at all times, and most individuals have a personal computer for home use. In this electronic age, it is primarily two companies that are competing over the market share in order to be recognized as the best performing tech company: Apple Incorporated and Microsoft Corporation. Most individuals, when asked, have strong preferences towards either Apple or Microsoft products
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Apple Incorporated’s asset utilization ratios: Figure 1. From 2012 to 2014, Apple Incorporated’s receivables turnover decreased by 1.5 times. This means that Apple was collecting there accounts receivable balances 1.5 times less in 2014 than they were in 2012. This decrease in receivables turnover caused an increase in the average collection period of roughly 13 days. Apple’s inventory turnover also significantly decreased by well over 50% from 2012 to 2014. Unsurprisingly, this decrease in inventory turnover mirrored the previous decrease in return on assets due to the large increase in the amount of inventory on the books. Fixed asset turnover and total asset turnover both also decreased slightly due to sizeable increases in inventory, long term investments, and property plant and equipment. Microsoft Corporation’s asset utilization ratios: Figure 2. Microsoft Corporation’s receivables turnover decreased slightly from 2012 to 2014, which resulted in a 2 day increase in average collection period for receivables. Microsoft’s inventory turnover experienced a significant decrease of roughly 50%, similar to Apple, as a result of the increased amount of inventory on the books. Fixed asset and total asset turnover also decreased marginally due to

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