Financial Forecasting Statement for Apple Inc.
Assignment Brief
For this assignment, find and use Apple Inc’s financial information from their 10-K reports to create a financial forecast for Apple for the next 3, 5, and 10 years. Note that if you wanted to go farther back in the company’s history, you could find additional filings on the SEC webpage in EDGAR. There are simpler and more complex ways to accomplish a forecast such as this, as you know from your previous statistics class(es) and as you have seen in the readings for this course, including averaging, straight-line, and time-series forecasting. As Greener and Martinelli (2015) argue, simple forecasts can be as effective as complex ones, and using several different types together results in even better predictions than a single complex forecast. Please follow these steps (read through them all before beginning)
Find Apple Inc.’s 10-K filings that will give you their financial data for the past 5 years. Note: You could find it on Apple, Inc.’s investor relations’ website, or in EDGAR. Create a spreadsheet where you will enter the 5-year data from the report (from page 24 of Apple’s 2015 10-K report). In your spreadsheet, build a similar set-up with the column in the left showing all the lines, e.g. from Net Sales down to Total Shareholder’s Equity.
Then create columns for the 5 years of historical data (2011) to (2015) – you will note that their fiscal year ends in September. Using this year-by-year historical data, calculate your 3, 5, and 10-year forecasts for each of the rows (i.e. Net Sales, etc., down to Total Shareholder’s Equity). You can choose which forecasting method you want to use, (remember your undergraduate statistics course) and there are refresher tutorials of various methods on the Internet. For example, here are some helpful videos and webpages on time-series analysis if you chose that method and need a refresher:
Excel - Time Series Forecasting (18:05) Spreadsheet Skills - Trendy Forecasting in Excel
After you have completed your forecast, in a Word document, state the type of forecasting method you chose and why. Then write a brief statement as to why Apple’s Board of Directors should be confident in these forecasts (for the 3, 5, and 10 years). Remember that hundreds of millions of dollars are at stake. Only one page is necessary for this written statement.
Submit both your written statement and the spreadsheet with your forecasts as attachments using the Session 4 Research Assignment link.
Note that you and your fellow classmates may produce different forecasts depending upon the methods you use. This is the nature of the process, and is the reason that it is such an uncertain and risky process in business. Nevertheless, we use forecasting all the time as one research tool to support our future-looking decision-making.
