The paper 'Apple Inc Working Capital" is a good example of a finance and accounting case study. Working capital remains an important factor in the performance of any firm. Working indicates the ability of the firm to be in a position of handling short-term obligations. Short term obligations include those liabilities that should be paid instant or other obligations of running the firm daily operations. When working capital of any firm is affected negatively then it is possible that most of the activities of the firm will stop. It is the working capital that will ensure the activities of the firm are running as expected.
Also, at the event that firm obligations are not fulfilled, then it will affect the credibility of the firm. Negative working capital will see the firm to have negative credit records and have battles related to unfulfilled obligations. It is expected that the current assets always should be of value that they will be able to settle the current liabilities. Current liabilities are the immediate obligation that the firm should undertake without failure. They should always be serviced before any other obligation comes.
In a scenario where company assets are less than the current liabilities, there is a likelihood of using other methods to settle short term credit. However, if they do not manage to pay back the creditors, it turns out to a worst-case of the bankruptcy of the organization (Beaney & Shaun, 2005, pg. 01). Change in working capital is usually reported in the cash flow statement. The cash flow statement is used since the net income can be totally different from the operating cash flow.
There is a various analysis that can be done in a company to indicate whether the current working capital can be able to meet the needs of the organization. Some of the liquidity ratios are the ones that are used to indicate whether the organization is moving in the right direction. When they show a negative trend, it is important for the organization to change. In this paper, we are going to discuss the working capital of Apple. Different factors and different trends of the working area to be discussed to gain different inside information about working capital in any organization (Beaney & Shaun, 2005, pg.
01). Apple’ s working capital In the period of 5 years between the year 2007 and that of 2011, the working capital of Apple has been in constant rise. The company has tried to constantly to ensure that the maintained working capital ratio is magnificent and desirable to ensure that its obligations are met. Through the working capital, we can be able to know the operational efficiency of Apple. Due to the fact that the company has been able to maintain a top and desirable working capital.
This has made apple to be one of the top companies desirable for investment (Jimmy, 2016, pg. 1). The major goal of Apple Inc. working capital management department is to ensure that all its operations continue without any problem. The department has ensured that the existing working capital will be able to assure continuity of the operations and also be at a position of settling the maturing short term debts and also those expenses that may arise out of the upcoming operations.
The management has been able to realize that the usage of networking capital is vital for the company as a measure of its liquidity. In the world, Apple Inc. is one of the few companies that have been able to operate with no absolute debt. However, most of those investors who have invested in Apple Inc. have worried whether the institution will be able to maintain its status of efficiency and proficiency if it can pay out its investors. But according to the status the company it is currently there is no need for the investors to worry as the management has done a brilliant job to invest its funds back to the economy and the market.
The working capital trend can be shown by the table below that indicates the changes in the working capital since the year 2007 to 2016 (Jimmy, 2016, pg. 1). The change has been positive such that the company remains to be stable in the fulfillment of its obligations. The trend has made able to be one of the reputable institutions in the world as it can be able to fulfill its obligations on time without any problem.
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