Is It Worth Buying Stocks Apple Inc? Essay Example

supported by five main reasons: first, because the company possesses specific strengths and opportunities that make the company a good candidate for investment; second, because it contains strong ratios (7 positive over 4 negatives) that reflect a rising projection; third because its balance sheet project soaring numbers and greater assets (although with greater liabilities as well); fourth because the rate of return would rise from 27% to about 32% if it were levered; fifth, because its Pro-forma cash flows reflect rising projections, especially in terms of total net operating capital, NOPAT, FCF, Interest tax savings, and FCFE; sixth and final because its total horizon value after three years would land on a total of $39.

The current projection worth $36. 88 billion is expected to increase by 8% to reach 83 billion. If Apple, Inc. continues this growth rate, it would have jumped by 16% to about $43 billion in six years and exceed $50 billion in equity after 10 years. The market value of equity was $9. 98 billion, indicating a total equity worth of $39 billion.

The total value of FCFE was projected to reach $83 billion. However, by 2008, the numbers only reached $24.17 billion, including the NOA. The yearly projection until 2008 for FCFE is lower than the horizon value of total equity, which is $39.83 billion. This is because the projection only covers equity and not the total value of operations (Brigham ; Ehrhardt 900). When compared to the present projection, the amount of FCFE only reaches $21.

According to Google Finance (2007), Apple Inc. has a FCFE value of $45 billion, which is lower than its horizon value of $24.17 billion. The

difference in value would increase with a 17% cost of equity when the company is leveraged. Apple Inc. stands out as an acquisition target, surpassing competitors such as Hewlett-Packard, Intel Corporation, and even Microsoft Corporation with a P/E ratio of 37.43.

Apple's balance sheet reveals growth in assets and revenue, along with expanding financial statements and projections. Notably, there is a substantial increase in net income and operating income. Despite its complex multinational structure, Apple maintains its growth and progress, anticipating even more significant achievements ahead.