Balance sheet items

Posted: August 26th, 2021

Week 8 Homework: The Annual Report

Name

Institutional Affiliation

Balance sheet items

            The selected company is Apple Inc., whose annual reports for the financial year 2019 and 2018 were reviewed to make the business decision by an investor. The company’s assets, liabilities, and shareholder equity have been compared between the years 2019 and 2018 for trend analysis. The total assets reduced from $365725 million in 2018 to $338516 million in 2019, which is a 0.074% decline (Annualreports, 2020). Also, the company’s total liabilities dropped by 0.041% from $258578 million in 2018 to $248028 million in 2019 (Annualreports, 2020). Additionally, the company’s shareholder’s equity declined by 0.16% from $107147 million in the year ended 2018 to $90488 in 2019 (Annualreports, 2020). Therefore, all the balance sheet items were on a declining trend from the year 2018 to 2019.

Income statement

            The income statement was also analyzed by checking the total revenue and net income.     Apple’s Inc. total revenue increased by 0.027% from $56505 million in 2018 to $58037 million in 2019 (Annualreports, 2020). However, the net income decreased from $59531 million in 2018 to $55256 in 2019, which is a 0.072% decline.

Shareholder’s perspectives

            The changes in the balance sheet and income statement items would harm an investor as he would fear to invest in a company with a declining trend. Shareholders want to be assured of stable returns on their investment that is not portrayed in a declining company trend as they expect constant returns (Andonov & Rauh, 2019). Also, investors look for revenue growth, consistency, and establish a pattern of the company’s performance over a period. Hence, Apple Inc.’s declining performance from the financial year 2018 to 2019 would have a negative perspective to investors.

Figure 1: Comparative assessment on Apple’s Inc.balance sheet items

References

Andonov, A., & Rauh, J. D. (2019). The return expectations of institutional investors.      

Annualreports, 2020. [online] Annualreports.com. Available at:             <http://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AAPL_201            9.pdf> [Accessed 10 June 2020].