I mainly need help with financial analysis, like the EBITDA, Profitability ratio, Liquidity Ratio, Leverage Ratio, Activities Ratio and an understanding if the firm itself financially healthy?

Exhibit 8 Apple Competitors: Selected Financial Information, 20002005 (in millions of dollars)
	2000	2001	2002	2003	2004	2005
Dell
Total revenues	31,888	31,168	35,404	41,444	49,205	55,908
Cost of sales	25,205	25,422	28,844	33,629	39,856	45,620
R&D	482	321	319	330	463	463
SG&A	3,675	3,236	3,505	4,008	4,761	5,140
Net income	2,177	1,246	2,122	2,645	3,043	3,572
Total assets	13,435	13,535	15,470	19,311	23,215	23,09
Total current liabilities	6,543	7,519	8,933	10,896	14,136	15,927
Total stockholders' equity	5,622	4,694	4,873	6,280	6,485	4,129
Gross margin	21%	18%	19%	19%	19%	18%
R&D/sales	2%	1%	1%	1%	1%	1%
SG&A/sales	12%	10%	10%	10%	10%	9%
Return on sales	7%	4%	6%	6%	6%	6%
Market value at year-end	45,630	70,858	68,968	87,003	104,689	70,488
Hewlett-Packard
Total revenues	48,782	45,226	56,588	73,061	79,905	86,696
Cost of sales	33,709	32,279	40,134	51,857	58,540	64,718
R&D	2,646	2,670	4,105	3,653	3,543	3,492
SG&A	10,029	9,722	12,345	14,664	14,530	14,674
Net income	3,697	408	(903)	2,539	3,497	2,398
Total assets	34,009	32,584	70,710	74,708	76,138	77,317
Total current liabilities	15,197	13,964	24,310	26,630	28,588	31,460
Total stockholders' equity	14,209	13,953	36,262	37,746	37,564	37,176
Gross margin	31%	29%	29%	29%	27%	25%
R&D/sales	5%	6%	7%	5%	4%	4%
SG&A/sales	21%	21%	22%	20%	18%	17%
Return on sales	8%	1%	-2%	3%	4%	3%
Market value at year-end	62,431	39,848	52,973	70,039	63,327	81,242
Lenovo
Total revenues	234.1	200.4	208.6	191.7	164.7	2,891.5
Cost of sales	104.4	84.0	85.4	83.7	74.3	2,741.1
R&D	NA	NA	NA	NA	NA	NA
SG&A	74.2	68.6	76.8	66.6	53.9	37.7
Net income	20.8	16.0	(61.8)	16.4	23.8	143.6
Total assets	277.8	279.8	181.3	142.3	167.4	1,157.9
Total current liabilities	24.5	31.3	27.0	20.2	15.3	445.2
Total stockholders' equity	140.6	156.7	96.7	114.3	143.8	667.2
Gross margin	55.4%	58.1%	59.1%	56.3%	54.9%	5.2%
R&D/sales	NA	NA	NA	NA	NA	NA
SG&A/sales	31.7%	34.2%	36.8%	34.8%	32.7%	1.3%
Return on sales	8.9%	8.0%	-29.6%	8.6%	14.4%	5.0%
Market value at year-end	4,696	3,833	2,501	3,200	2,236	3,923
Intel
Total revenues	33,726	26,539	26,764	30,141	34,209	38,826
Cost of sales	9,429	9,649	8,389	8,253	9,591	15,777
R&D	4,006	3,994	4,054	4,365	4,778	5,145
SG&A	8,986	8,260	8,543	8,736	9,466	5,688
Net income	10,535	1,291	3,117	5,641	7,516	8,664
Total assets	47,945	44,395	44,224	47,143	48,143	48,314
Total current liabilities	8,650	6,570	6,595	6,879	8,006	9,234
Total stockholders' equity	37,322	35,830	35,468	37,846	38,579	36,182
Gross margin	72%	64%	69%	73%	72%	59%
R&D/sales	12%	15%	15%	14%	14%	13%
SG&A/sales	27%	31%	32%	29%	28%	15%
Return on sales	31%	5%	12%	19%	22%	22%
Market value at year-end	202,321	211,092	103,836	209,351	147,895	150,484
Microsoft
Total revenues	22,956	25,296	28,365	32,187	36,835	39,788
Cost of sales	2,334	1,919	4,177	4,596	5,899	5,316
R&D	3,775	4,379	4,307	4,659	7,779	6,184
SG&A	8,925	10,121	10,604	12,278	18,560	16,946
Net income	9,421	7,346	7,829	9,993	8,168	12,254
Total assets	52,150	59,257	67,646	79,571	92,389	70,815
Total current liabilities	9,755	11,132	12,744	13,974	14,969	16,877
Total stockholders' equity	41,368	47,289	52,180	61,020	74,825	48,115
Gross margin	90%	92%	85%	86%	84%	87%
R&D/sales	16%	17%	15%	14%	21%	16%
SG&A/sales	39%	40%	37%	38%	50%	43%
Return on sales	41%	29%	28%	31%	22%	31%
Market value at year-end	231,290	356,806	276,412	296,073	290,720	278,358

Exhibit 8 Apple Competitors: Selected Financial Information, 20002005 (in millions of dollars)
	2000	2001	2002	2003	2004	2005
Dell
Total revenues	31,888	31,168	35,404	41,444	49,205	55,908
Cost of sales	25,205	25,422	28,844	33,629	39,856	45,620
R&D	482	321	319	330	463	463
SG&A	3,675	3,236	3,505	4,008	4,761	5,140
Net income	2,177	1,246	2,122	2,645	3,043	3,572
Total assets	13,435	13,535	15,470	19,311	23,215	23,09
Total current liabilities	6,543	7,519	8,933	10,896	14,136	15,927
Total stockholders' equity	5,622	4,694	4,873	6,280	6,485	4,129
Gross margin	21%	18%	19%	19%	19%	18%
R&D/sales	2%	1%	1%	1%	1%	1%
SG&A/sales	12%	10%	10%	10%	10%	9%
Return on sales	7%	4%	6%	6%	6%	6%
Market value at year-end	45,630	70,858	68,968	87,003	104,689	70,488
Hewlett-Packard
Total revenues	48,782	45,226	56,588	73,061	79,905	86,696
Cost of sales	33,709	32,279	40,134	51,857	58,540	64,718
R&D	2,646	2,670	4,105	3,653	3,543	3,492
SG&A	10,029	9,722	12,345	14,664	14,530	14,674
Net income	3,697	408	(903)	2,539	3,497	2,398
Total assets	34,009	32,584	70,710	74,708	76,138	77,317
Total current liabilities	15,197	13,964	24,310	26,630	28,588	31,460
Total stockholders' equity	14,209	13,953	36,262	37,746	37,564	37,176
Gross margin	31%	29%	29%	29%	27%	25%
R&D/sales	5%	6%	7%	5%	4%	4%
SG&A/sales	21%	21%	22%	20%	18%	17%
Return on sales	8%	1%	-2%	3%	4%	3%
Market value at year-end	62,431	39,848	52,973	70,039	63,327	81,242
Lenovo
Total revenues	234.1	200.4	208.6	191.7	164.7	2,891.5
Cost of sales	104.4	84.0	85.4	83.7	74.3	2,741.1
R&D	NA	NA	NA	NA	NA	NA
SG&A	74.2	68.6	76.8	66.6	53.9	37.7
Net income	20.8	16.0	(61.8)	16.4	23.8	143.6
Total assets	277.8	279.8	181.3	142.3	167.4	1,157.9
Total current liabilities	24.5	31.3	27.0	20.2	15.3	445.2
Total stockholders' equity	140.6	156.7	96.7	114.3	143.8	667.2
Gross margin	55.4%	58.1%	59.1%	56.3%	54.9%	5.2%
R&D/sales	NA	NA	NA	NA	NA	NA
SG&A/sales	31.7%	34.2%	36.8%	34.8%	32.7%	1.3%
Return on sales	8.9%	8.0%	-29.6%	8.6%	14.4%	5.0%
Market value at year-end	4,696	3,833	2,501	3,200	2,236	3,923
Intel
Total revenues	33,726	26,539	26,764	30,141	34,209	38,826
Cost of sales	9,429	9,649	8,389	8,253	9,591	15,777
R&D	4,006	3,994	4,054	4,365	4,778	5,145
SG&A	8,986	8,260	8,543	8,736	9,466	5,688
Net income	10,535	1,291	3,117	5,641	7,516	8,664
Total assets	47,945	44,395	44,224	47,143	48,143	48,314
Total current liabilities	8,650	6,570	6,595	6,879	8,006	9,234
Total stockholders' equity	37,322	35,830	35,468	37,846	38,579	36,182
Gross margin	72%	64%	69%	73%	72%	59%
R&D/sales	12%	15%	15%	14%	14%	13%
SG&A/sales	27%	31%	32%	29%	28%	15%
Return on sales	31%	5%	12%	19%	22%	22%
Market value at year-end	202,321	211,092	103,836	209,351	147,895	150,484
Microsoft
Total revenues	22,956	25,296	28,365	32,187	36,835	39,788
Cost of sales	2,334	1,919	4,177	4,596	5,899	5,316
R&D	3,775	4,379	4,307	4,659	7,779	6,184
SG&A	8,925	10,121	10,604	12,278	18,560	16,946
Net income	9,421	7,346	7,829	9,993	8,168	12,254
Total assets	52,150	59,257	67,646	79,571	92,389	70,815
Total current liabilities	9,755	11,132	12,744	13,974	14,969	16,877
Total stockholders' equity	41,368	47,289	52,180	61,020	74,825	48,115
Gross margin	90%	92%	85%	86%	84%	87%
R&D/sales	16%	17%	15%	14%	21%	16%
SG&A/sales	39%	40%	37%	38%	50%	43%
Return on sales	41%	29%	28%	31%	22%	31%
Market value at year-end	231,290	356,806	276,412	296,073	290,720	278,358

This semester the written case will be Apple Inc. in 2006. A complete case analysis contains three main parts:

A short financial analysis to assess the companys health

A complete analysis of the firm (internal and external)

A recommended strategy based on the results

The financial analysis should demonstrate two things:

1. Is the firm itself financially healthy? Look at its performance over time, both in terms of being profitable or solvent, and how the market has rewarded it. In general, this portion of the assignment should be an in-depth analysis of the financial status of the firm(s) being considered.

2. How strong is it relative to its competition? Are its competitors more or less profitable over time? How has the market valued them?

You dont need to be long-winded or a financial analyst to do this, but you should include actual numbers. You may find that EBITDA is a good financial measure. Whatever you find, be it from the case or outside research, put into useful charts or tables and place in the exhibits section. State your conclusions in the report itself and reference the specific exhibit when you do. The key is to support your conclusions. I cannot stress this point enough. Please do not throw a bunch of numbers on the paper for the sake of doing so. Everything you include must lead to a point, otherwise do not include it. For example, if you provide liquidity ratios as part of your exhibits, it is not sufficient to say that, say, the quick ratio was 2. In itself, this number means nothing to me. If you are trying to make the case of liquidity (whether in favor or against Apple), then you should use this ratio longitudinally (i.e., over time), or cross-sectionally (i.e., comparing it to Apples competitors), in order to draw meaningful conclusions. Hopefully, this will help you to think about what information is truly relevant and which does not support your logic.

Generally, the analysis section should identify the resources and capabilities which the firm can leverage within its marketplace in order to remain successful in the future. A complete firm-level study will contain three main parts:

1. The external analysis of the firm, which describes the context in which the firm must compete. A thorough external analysis will first address the general environment described in class (see the lecture noteslegal, economic, etc.). Second, look at the industry dynamics and competitive market (e.g. who is the firm selling to, what challenges does the firm face in profitably reaching their customers). Next, the analysis should discuss the firms competitorsare they larger, smaller, more profitable, more flexible? What advantage or disadvantage would these competitors have in the marketplace? The 5-forces model is a good tool to organize your work when defining the competitive environment. While not perfect, it will ensure that you have covered the main points. It is better if you do not mention the term 5 forces diagram in the texthow you display the information is up to you and the needs of your audience (i.e. a manager may never have heard of the 5 Forces)but do show a diagram as an exhibit.

2. The internal analysis of the firm describes the strengths and weaknesses the firm brings to its competitive environment. What resources or capabilities can a firm leverage against its competitors and/or to tap new markets? What weaknesses we might see that will handicap the firm in the future? What are the key strategies the firm is pursuing? Explain whether the strategies are good or bad, and provide support for your arguments. A good internal analysis will show the difference between core competencies and their results. As an example, cost leadership can be the result of engineering capabilities. While sometimes difficult to use, the VRIO analysis is another good analytical tool which can help you to organize your thoughts and develop a supporting argument for why a resource or capability yields a competitive advantage. Having analyzed the firm, you should have an idea of what strengths the firm should be leveraging on and you can look again at the external environment to see what opportunities it should pursue. In many of the cases, the firm in question is contemplating, or has implemented, several specific strategic actions (e.g., an acquisition). In this situation, the written case analysis should also include an evaluation of these specific strategic actions and, where appropriate, recommendations should be made and justified.

3. The recommended strategy should occupy the last quarter to one-third of your analysis. Ideally, you would give one to three alternatives, possibly listed in bulleted form. One option could actually include dont change anything, but very likely this will not be the best choice, especially in a competitive market. Select one of these alternatives as the preferred recommendation. While all three might be good, a firm may only be able to attack one at a time, and will want to know which one you think has the biggest return. Explain why you believe this is the best option for the firm. The alternatives need to be specific action itemssomething that if it were developed into a plan, you could go to a bank and get financing. As an example, instead of saying Firm Z should acquire other companies, try to suggest possible candidatesand say why Firm Z would benefit. If you cant find specific firms, you could say, acquire firms in the range of $XX revenue, or $YY market capitalization, or some other relevant factor. Instead of saying form an alliance, you could recommend form an R&D alliance with Q to leverage this firms superior product rollout capabilities against Qs more advanced technology. It may take some effort, but this will show that you understand a) what makes the firm strong or weak and b) how it can take advantage of those factors. You could even recommend a firm liquidatebe specific and say how management should sell it off.

Exhibit 1a Apple Computer: Selected Financial Information, 1981-2005 (in millions of dollars, except for employee and stock-related data) 004 1,902 6,309 7,983 5,733 8,279 5,871 13,931 9,738 Net sales 9,833 8,865 5,742 4,021 6,207 4,387 4,462 10 RAsAArrh and davelnnman Selling, general, and administrative 1,568 1383) 1,546 620 786 1,740 1,557 1,683 2,393 274 Operating income (loss) Net income (loss) Cash, cash equivalents, and short term investments Accounts receivable, net Inventories Net property, plant, and equipment ,745 1,496 5,464 1,050 8,261 576 263 893 4,566 950 2,300 4,027 953 4,337 669 598 5,364 2,003 2,058 621 6,298 1,658 4,095 4,289 1,520 Total assets Total current liabilities Total shareholders' equity Cash dividends paid Employees International salesisales Gross margin R&Disales SG&A/sales Retum on sales Retum on assets Return on equity Stock price low Stock price high P/E ratio at year-end Market value at yearend 6,803 1,933 8,050 2,680 767 7,466 14,432 45% 11,728 46% 5,600 13,398 13,566 42% 2,456 9,663 13,426 16,820 43% 49% 32% 27% 27% 22% $8.75 10.75 $36.05 1,223.7 2,578.3 6,649.9 2,598.55,539.7 4,96.5,146.4 7,858.525,892.5 60,586.6 Exhibit 1a Apple Computer: Selected Financial Information, 1981-2005 (in millions of dollars, except for employee and stock-related data) 004 1,902 6,309 7,983 5,733 8,279 5,871 13,931 9,738 Net sales 9,833 8,865 5,742 4,021 6,207 4,387 4,462 10 RAsAArrh and davelnnman Selling, general, and administrative 1,568 1383) 1,546 620 786 1,740 1,557 1,683 2,393 274 Operating income (loss) Net income (loss) Cash, cash equivalents, and short term investments Accounts receivable, net Inventories Net property, plant, and equipment ,745 1,496 5,464 1,050 8,261 576 263 893 4,566 950 2,300 4,027 953 4,337 669 598 5,364 2,003 2,058 621 6,298 1,658 4,095 4,289 1,520 Total assets Total current liabilities Total shareholders' equity Cash dividends paid Employees International salesisales Gross margin R&Disales SG&A/sales Retum on sales Retum on assets Return on equity Stock price low Stock price high P/E ratio at year-end Market value at yearend 6,803 1,933 8,050 2,680 767 7,466 14,432 45% 11,728 46% 5,600 13,398 13,566 42% 2,456 9,663 13,426 16,820 43% 49% 32% 27% 27% 22% $8.75 10.75 $36.05 1,223.7 2,578.3 6,649.9 2,598.55,539.7 4,96.5,146.4 7,858.525,892.5 60,586.6