Audit Research on Apple Computer Inc

AuditResearch on Apple Computer Inc

Table of Contents

1. Company background 3

a. Company industry 3

b. Products 3

c. Raw materials 5

d. Company size 5

e. Other people and institutions supporting Apple Inc 6

f. Annual report analysis 7

2.0 10-K report 8

References 9

AuditResearch on Apple Computer Inc.

1. Company backgrounda. CompanyIndustry

AppleInc. company design and products belong to the technology sector andencompassed within the computer software, computer hardware, consumerelectronics and digital distribution industries (Edgaronline, 2014).Electronic and computer technology industry encompasses both hardwareand software products. Dominating technology in the sector, whichinclude innovation in computer devices, portable music players, andsmartphones, has been influenced by development in faster microchipprocessors and larger, lighter memory space devices. The companydesigns, assembles, and markets digital music players, media devices,and mobile communication devices to customers worldwide.

b. Products

AppleInc. main product ranges from designing and manufacturing of mobilecommunication media devices, personal computers and portablecomputing digital music devices. The company also designs softwarefor the devices, provides support services, accessories andnetworking and connectivity solutions.


Applemain product portfolio in digital devices include iPhones which arethe company smartphones fitted with multimedia capability, internetaccess, Wi-Fi, Bluetooth and run on Apple’s iOS MultitouchOperating system. The iPad is the company tablet using the sameoperating system as iPhones equipped with a powerful camera and runnumerous applications. The iPhones have high definition cameras withvideo capability supported by different visual apps that can bedownloaded from iTunes. Mac is the desktop company line and portablepersonal computers equipped with Intel microprocessors, run on OS Xoperating system and have internet capabilities and other networksconnectivity. The iPod is the company Digital Music Player productline with brands such as iPod touch, iPod Nano, and iPod Shuffle.


Theplaystore and the iTunes are a collection of multimedia informationthat are readily available to all iOS devices and Mac computers.These platforms enable users to buy, rent and share information suchas books, movies, videos through a common network platform. Mac Appstore contains a collection of different applications used by Appledevices that can be downloaded and installed. On the other hand, theiCloud provides a cloud service to Apple device users to storemultimedia, personal documents and data on a system thatsystematically updated all devices of the same user to keep them upto date.


Thecompany devices run on different operating systems, which includeiOS, and OS X operating systems. IOS is a MultiTouch OS that all iOSdevices use. OS X, on the other hand, is developed for Mac built onUNIX. The company has many other application software such as iLife,iWork that are consumer-oriented digital lifestyle application suitesenabling users of simplifying their daily lives.

Commonaccessories developed by Apple include Apple TV, a high definition TVwith access to iTunes content through streaming, and Apple watchesgear (Edgaronline, 2014). The company also offers other accessoriessuch as casings, cables, ear pods, headphones, lightning dock, andgift cards.

c.Raw materials

Allelectronic components supplied to Apple Inc. come from multiplesources but some specific components specifically are sourced fromsingle or limited sources. Many components used to assemble thegadgets are however subject to industry-wide competition from manyother computers, communication, and media devices companies. Allhardware components manufactured outside the USA through outsourcingpartners mainly from Asia. The main components of the digital devicesinclude the touch screens, microchips and circuit boards, camera, andaudio components of the devices. Different suppliers manufacture thedevices due to the nature of specialty required in the technologiesthat support them. The main components that are sourced from specialsuppliers include microprocessors, enclosures, LCDs, optical drivesand application specific integrated circuits with specific designsunique to Apple only. Most of these components are subject tocompetition from other personal computers and mobile communicationdevice manufactures, and there is a high risk of a supply shortagewhen demand is high (Edgaronline, 2014).

d. Companysize

Salesand Assets

Appletotal revenue in FY 2014 exceeded $182.8 billion with a net profit of$39.5 billion and expected to grow in 2015 by 27%. Total assets in2014 amounted to $231.8 billion while liabilities totaled $120.3billion settling the company shareholders’ Equity at 111.5 billionin FY 2014.the company assets range from tangible property,intellectual property, manufacturing and assembling plant, officebuildings, distribution warehouses, and equipment.


Thecompany employed over 92,600 employees as at 2014 working full timeand a further 4,400 full time working as temporal employees andcontractors. The employees are spread across the 16 countries AppleInc. operates in working as warehouse attendants, workshops and plantlabor, sales teams and the management and supervisory teams. Over46,200 of the entire workforce work in the retail section of thecompany.


AppleInc. has its headquarters at Apple campus, Cupertino, California,U.S. with 424 retail stores in 16 countries and an online storeserving 39 countries (Edgaronline, 2014). However, the company’sretail stores keep on increasing, as the company reach new markets.The company generates 36% of its revenue from domestic customerswhile the international market is concentrated in Europe (22% ofsales), China 16%, Japan 8% and Asia/Pacific countries covering 6% oftotal revenue.

e. Other people andinstitutions are supporting Apple Inc.

AppleInc. Business is supported by some companies within the supply chainsuch as 3M, which provides touchscreen films for iPads and iPhones,Alcoa, which supplies aluminum casings, and Corning Inc., a companythat provides Gorilla Glass. Apple also deals with Analog DevicesInc. (responsible for providing 3D and touch controllers) and IntelCorporation responsible for providing chips and Glu Mobile Inc.responsible for the development of Apple iOS apps and mobile games.Other suppliers include Jabil Circuit Inc. based in China thatsupplies phone casing and other electronic device and components,Micron Technology Inc., Murata Manufacturing Co. Ltd, SanDisk,Toshiba, and Samsung all supplying different components that make upApple Inc. products. Nidec Corp manufactures the Apple Watch Tapticengine, a technology that enables Apple watch gear to produce asensation when tapped on the wrist. The company is based in Japan andrenowned as a leader in smartphone technology especially vibrationmotors. Apple Inc. also associates with world largest retail storeswhere its products are displayed and sold directly to customersacross the globe. The company also works closely with someinternational and regional freight companies and distributors(Edgaronline, 2014).

f. Annual reportanalysis

AppleInc. Annual report provides important analysis of the companyperformance regarding the revenue generated per quarter net profitearned, gross margin attained and the percentage of the gross marginto the sales income per quarter. The report also provides the companymanagers position on the performance regarding attained targets insales, cost cutting, and business expansion. The report analyzesdifferent financial details of the company looking into the assetsthe company has accumulated, the cash the company handles fromrevenue and other earnings, the performance of the company shares aswell as its profitability. The report enables managers to forecastfor the future by using the past performance to determine riskfactors and influencing future performance. In addition, the reportcovers supplemental information for the company, consolidatedstatements, financial reviews, environment analysis, and reports ofaccountants. In this regards, the report intends to convey thefinancial position of the company, its viability, and standing,environmental capacities, targets, and its successes over a couple ofyears.

Theannual report has a cover that displays details of the company, anarrative statement providing an overview of the company, aperformance and year review section providing significant events,analysis and significant tools, testimonials, products, services andpatent and research information as well as stock analysis. Themanagement discussion and analysis section provide insight ofdifferent aspects of the business. Topics discussed include newpositions created in the company new products and technologiesunveiled, the progress of the company acquisition, product launchesand other information providing details of the previous year businessactivities in the company. The financial statement elaborates thecompany income statement, balance sheet, cash flow statement and anauditor’s report and graphs and charts showing statistics. Thesenumbers provide investors with detailed information regarding numbersof how their investments are faring. The figure presented provides acomparison of the current financial year performance with previousyears. Finally, the annual report has an appendix providingsupporting documents to the information provided and lists ofdifferent items as represented in the report (Edgaronline, 2014).

2.0 10-K report

Inthis case, the annual report and 10-K report are similar in content.


Edgaronline.(2014). AppleInc. Form 10K. Filed 10/27/14 for the Period Ending 09/27/14.Retrieved 8 March 2016 from