Apple is a company that has experienced a great deal of growth, especially in the past few years. Creating a flexible budget for Apple will allow investors and executives to get a general feel for operating costs in the next fiscal year.
(Table 1 omitted for preview. Available via download)
This budget shows that Apple has a great deal of leeway when it comes to variable expenses simply because the market that Apple is in can be so unpredictable, so it is important for the flexible budget to reflect that. This is the main difference between a static and flexible budget: flexible budgets allow for more broad assumptions for revenue and expenses. They are less precise but help to establish a ballpark figure for income and expenses. These budgets can easily be used for planning and control because they allow businesses to expect and prepare for certain losses and gains while also allowing for a great deal of flexibility. Flexible budgets allow for this level of control, while more static budgets tend to not be as forgiving when sudden changes arise.
(Table 2 omitted for preview. Available via download)
As the table shows (Apple, 2013), Apple Inc.'s revenues have more than doubled over the course of the last three fiscal years. Although that alone is cause for much celebration within the company, what is also impressive is that Apple has managed to minimize its operating expenses so that, although profits have more than doubled, operating expenses have yet to break the double mark, meaning that Apple is experiencing even more growth because it has made its business model so efficient. This is also helped because the United States’ GDP has been steadily increasing over the last three years, perhaps as a rebound from the great recession (United States GDP Growth Rate, 2013).
Microsoft, Apple’s closest competitor (although that handle is becoming more and more close to being Google with each passing year) has not been doing as well in the past year, as the table shows.
(Table 3 omitted for preview. Available via download)
This shows that Microsoft (Microsoft, 2013), while certainly still holding strong, has been experiencing a few issues, and these issues are leaking over into their financial reports. Their liabilities, for example, have increased greatly since 2010, yet their income is, at best, mediocre. They also have far less cash and cash equivalents as they did just three years ago. Microsoft has been putting money into ventures that have not been profitable for them. For example, the announcement of the Xbox One and its strict DRM policies angered customers and caused a drop in the stock, even after they promised to remove the DRM policies. Additionally, even their software division, once the cornerstone of Microsoft, is floundering, with the general consensus of Windows 8 temperate at best. The same goes for their ventures into the smartphone market, with their phones simply not able to compare with the much more popular Android and iPhone.
Apple, Inc. (2013). Investor relations. Financial History. Retrieved from, http://investor.apple.com/financials.cfm
Microsoft. (2013). Annual report: Balance sheet. Retrieved from, http://www.microsoft.com/investor/reports/ar12/financial-review/balance-sheets/index.html
United States GDP Growth Rate (2013) Retrieved from http://www.tradingeconomics.com/united-states/gdp-growth