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Collection and Evaluation
Research Project Part 2
Apple Inc.
Business Finance Group 1
Colin Brogan
Edelmira Hernandez
Elizabeth Fisher
Jessica Butler
Khalia Alexander-Cobbs
Francesca Bodunrin
University of Maryland Global Campus
FINC 330 6982: Business Finance
Professor Bryan Smith
August 3, 2021
Research Project Part 2 – Apple Inc.
Introduction
Apple Inc. is a tech company established in 1977 known for its design, development, and retailing of high-end electronic products. The products include iPhones, tablets, personal computers, smartwatches, among others. The company also offers services such as advertisements either through its internal platforms or third-party licensing. The company’s success makes it a very strong asset also traded in the stock market. This paper seeks to evaluate the companys bond
performance within the last couple of years and see if it is potentially a good investment.
Financial Leverage Ratios
Collection and Evaluation of the Data About Bond Performance of Apple Inc.
Collection and Evaluation of the Data About Stock Performance of Apple Inc. for the Last One Year
In the past three years, the Price-to-Earnings ratio has been relatively high for Apple Inc. However, the ratio started out at 24.7 in 2019 and then increased to 40.45 in 2020, which is an extremely high P/E ratio, but in the past year it dropped to
its current ratio of 28.49. Overall these are great numbers for their Price/Earnings ratio but it is not good news for the company that their Price to earnings ratio decreased in the past year. The industry average ranges from 13 to 15 which is
significantly lower than Apples P/E ratio.
Apples Price/Book ratio has been extremely high over the past few years. In 2019 it was 14.23, followed by 34.16, and is currently 37.51. This implies that Apple is considered to be overvalued. Typically any P/B ratio above 3 means that it is
overvalued, which can lead to investors of the company losing money. The current industry average for this ratio is 11.2 which is still significantly less than Apples P/B ratio.
Over the past 3 years, Apples diluted earnings per share has been positive and increasing year to year, which is great news for the company. The current industry average is about 4.85 which is slightly lower that Apples current EPS, backing
up the fact that Apple is performing well. However, there is still a ton of room for improvement since the EPS can go all the way up to 99.
Apples dividends per share has also been positive and increasing over the past three years, however their dividends per share never goes above 1 which is lower than the industry average of 1.5. This implies that the stock market’s price is
higher than the dividend payments that shareholders get from owning the Apple stock. Therefore, Apples low dividends per share indicate that the company is overvalued.
Although Apple, Inc. is mostly performing above industry averages it is still safe to say the company is overvalued. As shown in the statistics above, the Price/Book ratio is considered overvalued when it’s above 3 and Apples current P/B ratio
is 37.51. Another indicator that Apples stock is overvalued is the fact that Apples dividends per share are lower than the industry average. Given this information above, it is reasonable to believe that common stockholders are not receiving an adequate return on their investment and instead should invest in a company with a lower Price/Book ratio and a higher dividends per share ratio. Furthermore, it is also not a good idea to buy this stock due to the overvaluation of the
company.
Market Ratio Analysis
Specific Recommendation, with Supporting Rationale for Apple Inc.s Management
Reflection
What I learned about this project is how to understand and calculate bond rations to better understand investments. An important ration to know is the price to earnings ratio. This ration helps you evaluate if the bond is overpriced or underpriced. Knowing this information will help you make better investment decisions.
– Edelmira Hernandez
While evaluating the data about the stock performance of Apple, Inc. I learned how to calculate many different ratios in order to learn more about Apple, Inc. This assignment showed me what each ratio(P/
Collection and Evaluation
RUBRIC |
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Excellent Quality 95-100%
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Introduction
45-41 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Literature Support 91-84 points The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned. |
Methodology 58-53 points Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met. |
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Average Score 50-85% |
40-38 points More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided. |
83-76 points Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration. |
52-49 points Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met. |
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Poor Quality 0-45% |
37-1 points The background and/or significance are missing. No search history information is provided. |
75-1 points Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration. |
48-1 points There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met |
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Collection and Evaluation