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Finance 1 Page

Apple Financial Analysis

Question

Research APPLE Inc, and access the company's Web page on the Internet to read its most recent annual report. The annual report is typically
found in an "Investor Relations" or "Company Information" section within the company's Web site.

Using the company's financial statements, perform a complete 2- or 3-year financial statement analysis addressing profitability ratios, turnover control ratios, leverage and liquidity ratio, and common-size statement analysis with constructive narrative. This analysis should not only include the calculation of the required ratios, but an assessment
of the firm’s health in each area and a summary of the findings with regards to the overall health of the firm. All related findings, conclusions, and recommendations should be supported with sound financial analysis principles and be properly sourced.

You may use the categories and measures that follow:

•Liquidity Measures: ◦Current ratio [current assets/current liabilities]

◦Quick ratio-acid test [(current assets – inventory)/current liabilities]

◦Net working capital to total assets [net working capital/total assets]

•Efficiency Measures: ◦Collection period [accounts receivable/average daily sales]

◦Inventory turnover [cost of goods sold/ending inventory]

◦Fixed asset turnover [sales/net fixed assets]

•Debt (Leverage) Measures: ◦Debt-to-asset ratio [total liabilities/total assets]

◦Debt-to-equity ratio [total liabilities/total stockholder equity]

◦Times-interest-earned (TIE) ratio [earnings before interest and tax [EBIT]/interest]

•Profitability Measures: ◦Gross profit margin [gross profit/sales]

◦Operating profit margin [EBIT/sales]

◦Net profit margin [net income/sales]

◦Return on assets (ROA) [net income/total assets]

◦Return on equity (ROE) [net income/total stockholder equity]

•Market-Based Measures: ◦Earnings per share (EPS) [earnings available to common stockholders/common shares outstanding]

◦Price-to-earnings ratio (P/E) [stock price/earnings per share]

◦Market to book [market value of common stock/total stockholder equity]

Solution

Title: Apple Financial Analysis
Length: 1 pages (362 Words)
Style: MLA

Preview

Apple Financial Analysis

This analysis is based on two financial years of the Apple Company, 2013 and 2014. Profitability of a firm measures the ability of the firm to create wealth for its shareholders. With regard to the profitability ratios, gross profit margin of the firm increased from 37.62% to 38.59% indicating growth in the percentage of gross profits Apple sales. However, due to an increase in the assets of the firm, its return on assets declined from 17.89% to 17.04%. Firm liquidity refers to the ability of the firm to pay its current liabilities as and when they fall due.

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