Analysis of the Financial Potential of Apple, Xiaomi, and Nokia: Recommendations for Potential Investors

Abstract

The growth of the smartphone industry is prominent. Smartphone now seems to become a necessity in people’s daily life. In order to provide a more comprehensive analysis and recommendations for investors on the investment of three famous smartphone manufacturers – Apple, Xiaomi, and Nokia, this article compares Equity Beta, Return on Equity (ROE), inventory turnover, the weighted average cost of capital (WACC), leverage ratio, and business risk of three companies. The result demonstrates that Apple has the highest inventory turnover ratio and ROE, as well as the lowest inventory turnover ratio. Apple maintains its leverage and business risk at a relatively medium level among the three companies. Xiaomi has the highest leverage level and WACC but the lowest business risk. The ROE and inventory turnover ratio of Xiaomi is also the weakest among the three companies. Compared with Apple and Xiaomi, Nokia has the lowest Beta and leverage ratio, but the highest business risk and a relatively low inventory turnover ratio. This article found that Apple’s shares would have a higher return, but the investment would also be relatively riskier. For investors pursuing a relatively stable income, Xiaomi would be a better choice to invest. In contrast, Nokia has less potential to bring profit to investors and shareholders.