Company DCF analysis file
Apple DCF Analysis
An Apple DCF should connect product demand, Services mix and the cash-tax schedule. Higher FY2025 operating profit did not produce higher cash after property investment. Treat the recurring operating case and tax-payment timing as separate assumptions.
Revenue, expenses and profit on one annual basis
Historical Apple consolidated comparison, $ millions: FY2024 ended 2024-09-28 and FY2025 ended 2025-09-27. These annual periods are separate from the later interim observation below.
| Measure | FY2024 | FY2025 |
|---|---|---|
| Net sales | 391,035 | 416,161 |
| Products cost of sales | 185,233 | 194,116 |
| Services cost of sales | 25,119 | 26,844 |
| Gross profit | 180,683 | 195,201 |
| Research and development | 31,370 | 34,550 |
| Selling, general and administrative | 26,097 | 27,601 |
| Operating income | 123,216 | 133,050 |
| Income-tax provision | 29,749 | 20,719 |
| Net income | 93,736 | 112,010 |
Source: FY2025 annual financial statements. Annual values are reported unless a row is marked derived.
Services revenue and its cost base should not inherit the hardware margin. Operating income is after research and selling costs; those expenses are not an additional capital deduction. The tax provision is an accounting expense, while the cash-tax payments in the cash bridge follow a different schedule. That distinction prevents a tax settlement from silently becoming a permanent margin assumption.
Use a revenue mix that matches the forecast
| Reported category sales, $ millions | FY2024 | FY2025 |
|---|---|---|
| iPhone | 201,183 | 209,586 |
| Mac | 29,984 | 33,708 |
| iPad | 26,694 | 28,023 |
| Wearables, Home and Accessories | 37,005 | 35,686 |
| Services | 96,169 | 109,158 |
Source: Annual business disclosures and financial notes. Annual values are reported unless a row is marked derived.
Services added $12,989 million of annual revenue, alongside growth in several hardware categories and a decline in Wearables, Home and Accessories. A single group growth rate conceals these different paths. Separate installed-base monetization from device replacement demand, and connect each revenue case to its corresponding cost of sales rather than carrying a blended margin unchanged.
Reconcile reported cash before forecasting investor cash
| Measure | FY2024 | FY2025 |
|---|---|---|
| Operating cash | 118,254 | 111,482 |
| Cash income taxes paid, net: already within operating cash | 26,102 | 43,369 |
| Property and equipment payments: positive deduction | 9,447 | 12,715 |
| Operating cash less property payments: derived | 108,807 | 98,767 |
Source: Annual cash-flow statement and related notes. Annual values are reported unless a row is marked derived.
The 2025 cash subtotal is 111,482 minus 12,715 = $98,767 million. Cash taxes paid increased by $17,267 million, while operating cash fell by $6,772 million. These movements do not prove the whole tax increase is temporary or should be added back. Normalize only tax items whose timing and recurrence have been investigated, and avoid subtracting the displayed tax payment twice.
The later interim period stays separate
| Observation | Period-specific evidence |
|---|---|
| Reported interim basis | Q3 FY2026 covers 2026-03-29 through 2026-06-27 and was released 2026-07-30. Revenue was $109,417 million in this quarter. |
| Interpretation boundary | The June-quarter gross-margin result includes a tariff-refund benefit. That benefit and the annual increase in cash tax payments have different timing; neither should become an automatic recurring margin or tax add-back. |
Source: official interim reporting. The dated quarter is not annualized here and is not added to either full-year column. Later reporting must be checked before refreshing the valuation date.
Turn the statements into a DCF operating case
Build operating cash for the chosen investor boundary from operating profit, operating taxes, depreciation, working capital and investment. Then reconcile the result with reported cash rather than assuming their definitions coincide. Buybacks and dividends distribute or finance equity cash; they do not increase device demand or operating profit. A per-share valuation also needs the chosen valuation-date shares and a consistent treatment of equity awards, not an old weighted-average EPS denominator applied indefinitely.
| Driver | Evidence to carry into the forecast | Downside condition to test |
|---|---|---|
| Hardware replacement | Units, realized price and product cost | Lower demand leaves procurement and operating commitments less flexible |
| Services monetization | Paid activity, revenue per user and delivery cost | Mix growth is offset by lower retained margin |
| Tax and capital timing | Cash-tax payments and physical investment dates | Reported cash is normalized with an unsupported blanket tax add-back |
Compare a weaker hardware case with a stronger Services case on gross profit before applying operating expenses. Keep the June-quarter tariff-refund qualification separate from a recurring margin assumption. Use explicit reinvestment and tax schedules through the forecast and terminal period; this historical bridge does not establish a current share price or workbook result.
Use the Apple financial analysis for the broader operating context, the company forecast to state the operating assumptions, and the DCF calculator only after defining the investor cash stream. Keep the statement definitions, reporting dates and your own assumptions visible when comparing valuation cases.
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