Apple Inc. Technological Firm

Introduction

Apple Inc. is an internationally renowned technological firm, famous for designing, producing and selling various varieties of consumer electronics, software and services. Besides its goods, Apple has a massive portfolio of services that cover cloud services, digital content, advertising, and payment services such as Apple Pay and Apple Card (Lu et al., 2022). The company’s revenue was high during the financial year 2023, and its products and services are performing moderately well in various markets.

Section A

Development One:

Currency Fluctuations Impacting Revenue

Description of Development:

In 2023, Apple was materially affected due to adverse changes in foreign currencies. The decline of the U.S. dollar relative to some other currencies in the world hurt the company in terms of its financial performance. This led to a deterioration in the net sales of various international markets, particularly in Europe, Greater China, and Japan.

Impact on the Financial Performance:

In these currency changes, the total net sales of Apple decreased by 3%, changing to the value of 383.3 billion dollars in 2023 (compared to the value of 394.3 billion dollars in 2022). Part of the reason attributed to this decrease in sales was the decline of other foreign currencies against the U.S. dollar. In particular, net sales in the Americas, Europe, Greater China, and Japan decreased. As an illustration, in Japan, net sales declined by 7 per cent (1.7 billion), and in Greater China, it decreased by 2 per cent (1.6 billion) (Du, 2023). The company also witnessed a 3 per cent reduction in sales of its products, especially its iPhone and Mac products, but its Services sector saw its use increase.

Mitigation Strategy:

In order to apply risk mitigation strategy, following steps taken.

• Price adjustments to offset exchange rate changes,
• Stronger focus on the Services segment, which offers higher margins and is less susceptible to currency fluctuations.
• Hedging initiatives to minimise the volatility as a result of the fluctuating foreign exchange rates (Liyao, Wang and He, 2021).

·       Development Two:

New Product Launches

The Development in Description:

In 2023, Apple presented multiple new products and services aimed at enhancing its market share and product portfolio. Among the remarkable products released were the iPhone 15 series, Apple Vision Pro, and various new MacBooks. They were innovations meant to serve the changing needs of consumers and compete in core markets (Qiu, 2023).

Impact on Financial Performance:

The introduction of these new products has been reviewed for their impact on the feasibility of Apple’s financial performance. Although the decrease in product sales was general, new products such as the iPhone 15 and Apple Vision Pro have long-term favourable implications, particularly in terms of brand loyalty and subsequent growth potential. Apple experienced a decline in iPhone and Mac sales, leading to a decrease in product revenues. However, the introduction of new products mitigated the overall sales decline (Chen, Liu, and Gong, 2021). Also, the Services revenue grew to $85.2 billion in 2023 compared to the previous year of 2022, with a figure of $78.1 billion.

Mitigating Stretegy

To capitalise on these new product launches, Apple focused on crafting a compelling marketing message for its latest offerings, particularly the iPhone 15 and Apple Vision Pro. The company also expanded its investments in research and development to continue innovating and preparing for the next generation of products. Apple has stated that its plan going forward is to engage new hardware and follow up with its expanding software and services environment, thus solidifying its market position (Lu, 2024)

Section B:

Policy of Dividend Matters

Dividend Theory Applied to Apple Inc.

The dividend policy of Apple complies more with the Dividend Irrelevance Theory, which was put forward by Modigliani and Miller in 1961. Under this theory, the value of a company is independent of its dividend policy in an ideal capital market that has zero taxes and zero disconnection costs. The company has been focusing its attention on utilising its profits to invest and innovate, including the creation of new goods and services, as well as using part of its earnings to return to shareholders. Apple has a flexible dividend policy, raising its dividends based on its financial strength, the amount of capital required, and the market’s attitude towards its growth potential.

Dividend History and Policy & Frequency

Below is an overview of the dividend payments made by the company:

• 2021: Quarterly dividend of $0.22 per share.
• 2022: Quarterly dividend of $0.23 per share.
• 2023: Quarterly dividend of $0.24 per share.

Apple is not known to have paid a special dividend other than its usual quarterly dividends, and the company concentrates on paying a steady and reliable dividend to its shareholders. 

The reasons why higher dividends are not paid

This can be said to be an adherent of the Dividend Irrelevance Theory, which has proposed that, provided the company is reinvesting its profits wisely by investing in profitable growth opportunities, the actual dividend payout may have no significant effect on the overall value of the company. Apple is keen to keep its cash reserves to support its investment in research and development, product innovation, acquisition, and other strategic investment targets (Perera, 2021)

Decision and Capacity of Pay Dividends

Several developments and events have affected Apple’s ability to pay dividends. Cash flow generation from key business lines, such as the iPhone, has proven sufficient to sustain the company’s high cash-generating capabilities, complemented by its expanding services division, which has enabled Apple to pay regular dividends to its shareholders. Nevertheless, the economic conditions, as well as global uncertainties, the joint effect of the COVID-19 pandemic and economic slowdown in specific markets, have also influenced dividend decisions by Apple. These have all resulted in regular reviews of its capital requirements and dividend policy, with the company choosing a cautious but also realistic way of ensuring that it can maintain a balance between investment in growth and dividends to shareholders (Jin, 2020

Section C:

Sources of Finance

Sources of Finance for Apple Inc.

The total combination of equity and non-current liabilities is being used by Apple Inc. to fund its operations and investments. The common stock and retained earnings primarily make up equity capital and have shown volatility within the last couple of years. The most significant component of non-current liabilities is the long-term debt, namely the term debt and the commercial paper.. (Lin, 2020). Apple’s Equity in 2023 was $62,146 million, representing a comparative increase from $50,672 million in 2022. This increase is attributed to the issuance of new shares, which is accompanied by retained earnings from profitable activities. Non-current liabilities were also present, with 2023 being slightly lower at 145,129 million, compared to 2022, wherein they stood at 148,101 million.

Gearing Ratio Calculation

It is the Ratio that explains the financial leverage, which displays the part of the debt utilised to support the finance the organisational assets.

Gearing Ratio = Total Liabilities/Debt / (Total Liabilities / Debt + Shareholders’ Equity)

Capital Structure Theory

Apple’s capital structure appears to support more of Modigliani and Miller’s (M&M) Irrelevance Theory, which posits that a firm’s value is unaffected by its capital structure in a post-free tax, bankruptcy costs, and market imperfection world. The company has a high level of debt, but a strategic level given the high cash flows and low bankruptcy risk. This enables Apple to enjoy the benefit of lower cost of debt and maximise returns on Equity. (Tengler, 2023)

Cash Management and Financial Risk

Gearing, especially when a company is heavily geared, as is the case with Apple, can also put a company at financial risk, e.g. interest rates, liquidity risks. Apple addresses these risks through hedging strategies, including interest rate swaps and foreign exchange contracts. These derivative instruments give the company the chance to hedge against risks arising out of its exposure to extensive international operations and fixed-rate debt. (Hendrikse, Bassens and Van Meeteren, 2018) Moreover, the significant cash holdings that Apple possessed, worth 148.3 billion dollars in 2023, can cushion the company against the effects of market fluctuations.

Other Influences on Capital Structure

• Economic situation
• Interest rates or global market changes.
• Cost of debt.
• high capital outflow requirements, especially for research and development
• Debt issuing capacity by the company due to its attractive credit rating (O’Rourke, 2021)

Section d Ratios calculation

Profitability Ratio Analysis

1. Gross Profit Ratio

It is a statistic that shows how well a company is capable of making a profit on its sales, other than what is expended in buying goods (Fadillah et al., 2024)

Gross Profit Margin =  Total Gross Profit /  Total Net Sales )  X 100

In the case of Apple Inc., the Gross Profit Margin rose slightly to 44.13 per cent in 2023, compared to 43.31 per cent in 2022. This figure allows us to conclude that Apple was able to keep a bigger portion of its sales as gross profit in 2023 than it was during the previous year. This might be as a result of a reduction in the cost of sale or more efficient control of the production costs. On the one hand, there was a decrease in overall sales, but on the other hand, the business managed to spend better, which led to a slight rise in profitability.

Net Profit Ratio

It is the profitability measure of an entire company, which indicates what percentage of revenue is left to profit after all costs are paid. (Suwandi et al., 2023)

Net Profit Margin = ( Net Income / Total Sales ) X 100

It of Apple is steady and higher at 25.31 since 2022 and 2023. This stability means that although the sales of the company declined marginally in 2023, its capacity to manage the operating and non-operating expenses remained the same. The constant net profit margin indicates that Apple’s difficulties in generating revenues did not impact its profitability, demonstrating good operational effectiveness and expense management.

Liquidity Ratio Analysis

• Current Ratio

It measures the short-term financial strength of a business and determines whether an organisation will manage to repay its short-term debtors using short-term creditors (Rashid, 2018)

Current Ratio = Total Current Assets / Total Current Liabilities

Apple has had a better Current Ratio in 2023 than in 2022, with the former being 0.99 against 0.88 in 2022. This increment implies that the company’s liquidity situation has improved, enabling it to fulfil its short-term obligations to a greater extent. This may be as a result of an increase in current assets, which are cash and receivables, or a decline in current liabilities, allowing Apple to have more freedom in the way it handles its short-term obligations.

• Quick Ratio

An even less liberal measure of liquidity is the Quick Ratio, which does not include inventories as part of the current assets but rather an attempt to determine how well a company can meet short-term commitments with its most liquid assets. (Hasidi, Baheri and Hajar, 2024)

Current Ratio = (Total Current Assets – Total Inventories) / Total Current Liabilities

The Quick Ratio of Apple has reached 0.94 in 2023, as compared to 0.85 in 2022. This is a lot better, indicating that Apple’s liquidity position has improved further when the inventory is excluded. This can be attributed to a rise in the amount of liquid assets that include cash and receivables because inventories were rising at a lower level than current assets. A quicker ratio of 1 indicates that Apple is more able to finance its short-term obligations without selling inventory.

Efficiency Ratio

1. Turnover Ratio

It evaluates the efficiency of a company in utilising its assets in sales (Brambilla et al., 2017).

Turnover Ratio = Total Sales / Total Assets

Apple’s Asset Turnover Ratio is 1.09 in 2023 as compared with 1.12 in 2022. This slight decrease indicates that Apple has experienced a slight decline in sales per dollar of assets between 2022 and 2023. This would be as a result of a slight decrease in total sales or a relatively flat asset base, meaning that Apple has become less efficient in using its assets in generating sales.

1. Inventory Turnover Ratio.

It is the number of times stock of a specific business has been sold and replaced within a time frame (Sharma and Agarwal, 2025)

Inventory Turnover Ratio = Total Cost of Goods Sold / Average Inventory

The 2023 inventory turnover ratio of Apple is 33.82, compared to 45.20 in 2022. This decrease means that Apple sold through its inventory more slowly in 2023 than in the past year. This reduction may have been brought about by an increase in inventories and a decrease in the cost of goods sold. The moderate turnover could also mean that Apple would retain more inventory compared to last year, as either there has been a difference in consumer demand or an element of the supply chain.

Investing Ratios

• Return on Equity (ROE)

The Return on Equity (ROE) represents the efficiency with which an enterprise is utilising the shareholders’ Equity to make a profit. (Krawczyk et al., 2020)

Return on Equity = (Net Income / Shareholders’ Equity)

According to 2023 data, the ROE of Apple has fallen by a small margin, from 1.96 in 2022 to 1.56. This decline indicates that Apple earned slightly less profit per dollar of shareholders’ Equity in 2023 compared to 2022. It might be because of having lower net income with an increase in the equity base, attributable to shareholder equity or profitability.

• Return on Assets (ROA)

It is used to determine the efficiency of the company in utilising assets to generate profit. (Huang et al., 2025)

Return on Assets = ( Net Income / Total Assets) X 100

Apple’s ROA was 27.5 per cent in 2023, down from per cent in 2022. Such a percentage means that Apple’s capacity to derive profit from its total assets has reduced marginally. With a stable asset base, the overall asset performance within the firm declined by a small margin due to the lower net income in 2023, which resulted in reduced ROA.

Conclusion

Judging by the financial information in the report performed by Apple in 2023, the company has shown the good performance, nevertheless, not without some changes in the key metrics. The earnings per share (EPS) also showed a minor increment by rising to 6.16 in 2023 compared with 6.15 in 2022, indicating its profits have been steady. The Book Value per Share was, however, found to be lower than 2022 as it was recorded as at 2023 and was 23. 9 as compared to the 25. 3 in 2022 which can be largely attributed to the decrease in total equity. In general, Apple is in a good financial position, yet the decline of Book Value indicates that further controlling of the level of equity and profitability is to be taken into account in the future.

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