Financial Risk In The Apple Company

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Apple Inc. a. Source of risk The Apple Company has faced various risks to its performance whether the risk is known or unknown that can affect project or business performance such as financial condition, operating results and stock price. The first risk that possesses by Apple Company is an economic risk through the consumer and business aspect. This is because the bad global economic conditions affect consumers and businesses have declined their demand of company products and services in response to tighter credit, higher unemployment, negative financial news, and financial market volatility even decreased in income or asset value. Besides, the fluctuation of currency such as interest rates and foreign currency rates affect the demand different…show more content…
The major business of Apple Company including a personal computer, mobile phones, music player, tablets and more. All these markets exist powerful competitors and numerous SMEs. As we know that, the Apple Company is a very powerful company which always develops and offers new innovative products and services on the part of consumers in this rapid technological change market. Therefore, the Apple Company also faces the price competition as competitors reduce their selling prices and attempt to imitate the Apple Company’s product features and applications within their own products. Undeniable that Apple Company’s future financial condition and operating could be affected if the Apple Company unable to compete effectively in these…show more content…
It uses a combination of internal and external management to carry out an investment plan which is investing in highly-rated securities and creates an investment policy that generally limits the amount of credit exposure to any other issue for achieving the investment’s objectives. Besides, the Apple Company also performed a sensitivity analysis for determining the impact of a change in interest rates. The interest rate swaps help to manage interest rate risk on its outstanding term debt and effectively convert fixed-rate payments into floating-rate payments inversely. Meanwhile, Apple Company has adjusted local currency product pricing due to the volatility in foreign currency exchange rates. According to the fluctuation currency rate, the Apple Company may enter into foreign currency forward and option contracts with financial institutions to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows and net investments in foreign subsidiaries. Moreover, the Apple Company also may enter into non-designated foreign currency contracts to offset the currency exchange gains and losses on foreign-denominated debt issuances. The value-at-risk (VAR) model was created to perform a sensitivity analysis by Apple Company for assessing the potential impact of volatility in

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