ACCT 556 Discussion 1

  • Based on your analysis of Apple’s most recent financial statements, predict whether Apple’s financial health will likely improve or deteriorate over the next five (5) years. Provide a rationale for your response.
  • Examine Apple’s statement of cash flows. Recommend at least two (2) actions that Apple could take in order to maximize the use of its cash flows. Provide a rationale for your response.

Discussion—Assessment of Risks

Risks are common for all firms, but there are different levels of risks in different industries and in different countries. The differences in risks from firm to firm or industry to industry are called unsystematic risks. Consequently, individual firms and industries deal with risks in different ways.

Consider two companies that deal in two entirely different industries, such as Microsoft, which is a technology company, and Caterpillar Inc., which manufactures heavy equipment.

Effects of Price Changes

Price changes can have a significant impact on the overall economy of a nation. A product experiencing price change can lead to an exponential change in the prices of related products. The price of oil provides a good example of this concept. As oil prices increase, the price of gasoline also increases. As almost all products rely on gasoline, either in the production process or in the distribution process, the prices of these products also increase.

Comparative and Absolute Advantage

This assignment will help students' master research and other analytical skills and will help students recognize reasons why economic growth varies by country. By using macroeconomic indicators, students will complete analysis and determine comparative and absolute advantage in different product categories for each country's economy.