1. HP v. Apple PRESENTED BY: DANIEL VAKNIN MICHAEL DIFIORE JENNY YOO CHRISTINA MURDOCH VANESSA LOPEZ

2. DuPont Framework 201420132012 AppleHPAppleHPAppleHP Return on Equity.3360.1828.3064.2025.4283(.4091) Profit Margin.2161.0451.2167.0457.2666(.1055) Asset Turnover.83311.0633.89231.04321.07041.0063 Equity Multiplier1.86663.8291.58454.24731.50103.8534

3. Profitability Ratios 201420132012 AppleHPAppleHPAppleHP Profit Margin.2161.0451.2167.0457.2666(.1055) Return on Assets.1801.0480.1934.0477.2854(.1062) Return on Shareholders’ Equity.3361.1828.3064.2041.4283(.4117)

4. Current Ratio: Apple vs. HP 201220132014 Apple$57,653/$38,542 = 1.50$73,286/$43,658 = 1.68$68,531/$63,448 = 1.08 HP$50,637/$46,666 = 1.09$50,364/$45,521 = 1.11$50,145/$43,735 = 1.15

5. Acid – Test Ratio (or Quick Ratio): Apple vs. HP 201220132014 Apple$56,862/$38,542 = 1.48$71,522/$43,658 = 1.64$66,420/$63,448 = 1.05 HP$44,320/$46,666 = 0.95$44,318/$45,521 = 0.97$43,730/$43,735 = 1.00

6. Debt to Equity Ratio: Apple vs. HP 201220132014 Apple$57,854/$118,210 = 0.49$83,451/$123,549 = 0.68$120,292/$111,547 = 1.08 HP$85,935/$22,833 = 3.76$78,020/$27,656 = 2.82$76,079/$27,127 = 2.80

7. How operations and investments are being financed  Apple: Financed mostly by proceeds by issuance of long-term debt 2014201320122011 Proceeds by issuance of long-term debt$11,960$16,89600

8. How operations and investments are being financed  HP: Financed mostly by issuance of debt 2014201320122011 Issuance of debt$2,875$279$5,154$11,942

9. Assessing the cash flow of Apple: 2014201320122011 Beginning cash balance$14,259$10,746$9,815$11,261 Cash flows from operating activities59,71353,66650,85637,529 Cash flows from investing activities(22,579)(33,774)(48,227)(40,419) Cash flows from financing activities(37,549)(16,379)(1,698)1,444 Ending cash balance$13,844$14,259$10,746$9,815

10. Cash as a source or a use of cash  Apple: Overall, cash is sometimes a SOURCE and USE of cash  2014: More cash was used than gained USE  2013: More cash was gained than used SOURCE  2012: More cash was gained than used SOURCE  2011: More cash was used than gained USE

11. Apple: Cash as a source or a use of cash 2014201320122011 Cash flows from operating activities: Net income$ 39,510$ 37,037$ 41,733$ 25,922 Accounts receivable, net(4,232)(2,172)(5,551)0 Cash flows from investing activities: Proceeds from sales of marketable securities$ 189,301$ 104,103$ 99,770$ 49,416 Purchases of marketable securities(217,128)(148,589)(151,232)(102,317) Cash flows from financing activities: Proceeds from issuance of long-term debt$ 11,960$ 16,986$ 0 Repurchase of stock(45,000)(22,860)00

13. Assessing the cash flow of HP: 2014201320122011 Beginning cash balance$12,163$11,301$8,043$10,929 Cash flows from operating activities12,33311,60810,57112,639 Cash flows from investing activities(2,792)(2,803)(3,453)(13,959) Cash flows from financing activities(6,571)(7,943)(3,860)(1,556) Ending cash balance$15,133$12,163$11,301$8,043

14. Cash as a source or a use of cash  HP: Overall, cash is mostly a SOURCE of cash  2014: More cash was gained than used SOURCE  2013: More cash was gained than used SOURCE  2012: More cash was gained than used SOURCE  2011: More cash was used than gained USE

15. HP: Cash as a source or a use of cash 2014201320122011 Cash flows from operating activities: Net earnings$ 5,013$ 5,113$ (12,650)$ 7,074 Other assets and liabilities(2,021)(1,037)(2,356)(293) Cash flows from investing activities: Maturities & sales of securities and other investments$ 1,347$ 1,153$ 662$ 68 Investments in property, plant, & equipment(3,853)(3,199)(3,706)(4,539) Cash flows from financing activities: Issuance of debt$ 2,875$ 279$ 5,154$ 11,942 Payment of debt(6,037)(5,721)(4,333)(2,336)

17. Major differences in cash flows by activities Operating activities:  Apple has a much larger net income than HP  Apple has a greater amount of other assets and liabilities than HP Investing activities:  Apple purchased a greater amount in marketable securities than HP  Apple received more proceeds from maturities of marketable securities than HP Financing activities:  HP used less cash to repurchase common stock  HP used less cash to pay dividends AppleHP $ 39,510$5,013 6,177(2,021) (217,128)(1,086) 18,8101,347 (45,000)(2,728) (11,126)(1,184)

18. Differences 2014: 1. Apple generated more cash from operating activities than HP 2. HP used less cash in investing activities than Apple 3. HP used less cash in financing activities than Apple AppleHP $ 59,713$12,333 (22,579)(2,792) (37,549)(6,571)

20. Investment Recommendations