Financial Analysis of Apple Company
Financial Policy – Apple Case. Case review the , spreadsheet and answer to the following questions:
1. From the beginning of 2000 until its peak in 2012, Apple’s stock price rose from $27.97 to $702.10, an increase of over 25 times. What specific attributes of their operational performance account for this stock performance?
2. Apple’s stock price decreased by 37% from its peak in September 2012 until the end of March 2013, from $702.10 to $442.66. Again, what specific attributes of their operational performance account for this stock performance?
3. Why does Apple hold so much cash? How much “excess” cash do they have? How much cash would they have after five years if they distributed all of their “excess” cash to shareholders in 2012? Use Exhibit 10 to forecast Apple’s financial status over the next five years.
4. If Apple chose instead to commit to an annual dividend from 2012-2017, how much do you think they could afford to distribute each year?
5. Quantitatively compare the results of a share repurchase, dividend, and iPref issuance. Assume that Apple will use all excess cash for share repurchases, dividends and, in the case of iPref, will issue five per share. For the iPref analysis, assume a constant P/E ratio of 10.0x as Einhorn did. How does this assumption impact the analysis?
6. What should Cook and Oppenheimer do?
7. What is Apple doing today in regards to dividends and repurchases?
