Apple Inc. Financial Ratio Analysis Essay Example
Apple Inc.
Financial Ratio Analysis
TABLE OF CONTENTS Executive Summary Introduction Liquidity i. ii. iii. Working Capital Current Ratio Current Cash Debt Coverage Ratio pg. 7 pg. 3 pg. 5 pg. 6
Asset Management i. ii. Inventory Turnover
Days in Inventory
iii. iv. Solvency i. ii. iii. iv.
Accounts Receivable Turnover Receivable Collection Period pg. 9 Debt to Total Assets Ratio Cash Debt Coverage Ratio Times Interest Earned Ratio Free Cash Flow pg. 11
Profitability Ratios i. ii. iii. iv. v. vi. vii. viii. Earnings Per Share Price Earnings Ratio Gross Profit Rate Profit Margin Ratio Return on Assets Ratio Total Asset Turnover Payout Ratio Return on Common Stockholder’s Equity Ratio
End Notes & References Appendix A – Apple Inc.’s Financials Appendix B – Hewlett Packard’s Financials
pg. 15 pg. 16 pg. 21
2
EXECUTIVE SUMMARY
Group 5 will analyze the efficiency and profitability of Apple Inc. by conducting a thorough review of a series of financial ratios. This analysis will include a comparison to Hewlett Packard (HP), a direct competitor to Apple Inc., as a way to provide fair balance to our analysis. Group 5’s evaluation of the financial performance and financial benefit to stakeholders of both companies will be accomplished by analyzing the liquidity ratios that measures the ability of both companies to meet their short term obligations; asset management ratios which determine the efficient use of assets, such as inventory and accounts receivable; the solvency ratios that would help determine the ability of the company over a long period of time with either debt or equity; and, finally profitability ratios that measures the company ability to obtain debt and equity financing and its ability to grow.
Liquidity Ratios:
Apple’s ability to meet its short-term obligations by leveraging its most liquid assets remains strong as it carries a substantial amount in Working Capital, $17 Billion in 2011. Although Apple’s Working Capital
Financial Ratio Analysis
TABLE OF CONTENTS Executive Summary Introduction Liquidity i. ii. iii. Working Capital Current Ratio Current Cash Debt Coverage Ratio pg. 7 pg. 3 pg. 5 pg. 6
Asset Management i. ii. Inventory Turnover
Days in Inventory
iii. iv. Solvency i. ii. iii. iv.
Accounts Receivable Turnover Receivable Collection Period pg. 9 Debt to Total Assets Ratio Cash Debt Coverage Ratio Times Interest Earned Ratio Free Cash Flow pg. 11
Profitability Ratios i. ii. iii. iv. v. vi. vii. viii. Earnings Per Share Price Earnings Ratio Gross Profit Rate Profit Margin Ratio Return on Assets Ratio Total Asset Turnover Payout Ratio Return on Common Stockholder’s Equity Ratio
End Notes & References Appendix A – Apple Inc.’s Financials Appendix B – Hewlett Packard’s Financials
pg. 15 pg. 16 pg. 21
2
EXECUTIVE SUMMARY
Group 5 will analyze the efficiency and profitability of Apple Inc. by conducting a thorough review of a series of financial ratios. This analysis will include a comparison to Hewlett Packard (HP), a direct competitor to Apple Inc., as a way to provide fair balance to our analysis. Group 5’s evaluation of the financial performance and financial benefit to stakeholders of both companies will be accomplished by analyzing the liquidity ratios that measures the ability of both companies to meet their short term obligations; asset management ratios which determine the efficient use of assets, such as inventory and accounts receivable; the solvency ratios that would help determine the ability of the company over a long period of time with either debt or equity; and, finally profitability ratios that measures the company ability to obtain debt and equity financing and its ability to grow.
Liquidity Ratios:
Apple’s ability to meet its short-term obligations by leveraging its most liquid assets remains strong as it carries a substantial amount in Working Capital, $17 Billion in 2011. Although Apple’s Working Capital