Question

Apple Computer CEO Steve Jobs announced he was taking a leave of absence for health reasons. Jobs has been fighting cancer and also recently underwent a liver transplant. Even though the computer giant is in good hands with Chief Operating Officer Tom Cook taking over the stock price fell by​ US$6.40, or nearly two​ percent, on the news.

Jobs is widely known as a visionary and a micromanager. Under his leadership Apple has transformed the computing industry. While​ Jobs' health outlook is unknown many investors are betting on his recovery and return. Those who bought Apple stock when Jobs stepped down in 2004 for health reasons made a nice profit when he returned to the helm.  

Question                                                                                                                               2 Marks

“When a financial manager makes good or bad financial decisions the impact of these decisions will be reflected in the​ company's Stock price”.

Do you agree with the decision taken in the above case? What decisions you will take to improve the stock price of Apple Computers in this situation?

Answer 1

Yes, I agree with the statement that “When a financial manager makes good or bad financial decisions the impact of these decisions will be reflected in the​ company's Stock price”. because, the price of a company’s stock depends on various factor. It may fluctuate according to the news, market sentiments and other good and bad decisions from the management of the company.

What decisions you will take to improve the stock price of Apple Computers in this situation?

There are several actions can take by the management of apple to improve the shares of apple. One way to improve the market value of share is to buy back the shares through open market. At that time the number of shares decreases and the business value per share increases.

Another way to improve the stock price is to boost the sales of the company by acquiring a fast-growing business with company stock. Both the two action will increase the stock price of the company. Business can issue additional stocks to acquire.

Raising debt is another way to improve shares off apple. Raising debt can reduce the overall risk of the firm. It means the firs is not in financial distress. That means it can pay the debt. Depending on the amount and the usage of fund will affect the stock price a good usage of funds and the amount of fund gives an increase in the stock price. In addition, the types of debt raised may also have an impact on stock price.