Question

Adding all numbers together, Apple shares rose 840% in the Eight years from the introduction of the Iphone on January 1st, 2007. However Now, cash has become a negative value for fund managers that have the intent to invest in Apples Shares. Apple's cash hoard could not achieve 2 % return threshold. Apple's low retum assets started to increase. It has a prediction for the next year; low return assets will increase eight times more than high return assets. Apple reported that weighted average interest rate earned on its cash or cash equivalents was only 1.65%.

How does this affect Samsung, or how maybe did Samsung react to this accounting issue?

Answer 1

Apple is generating lower return on assets invested in the product(Iphone) eventhough the CAGR is good since last 8 years which means that not meeting the ROI which the Fund managers are targeting for their investment. Now this will divert the flow from APPLE to SAMSUNG and Fund Manager will check on the ROI of their investment and if benchmark achievable then they will opt SAMSUNG for investment point of view.