Company Name is Apple Inc.

 

Ratio analysis provides another set of patterns to evaluate before deciding to buy or sell a company’s stock. Ratios reveal more than just the past performance; ratios reveal how effectively the company converts product sales into shareholder returns. Ratios provide a gauge for comparison across time and across the industry (competitors), while removing the impact of size differences. Would you rather invest in Company A, with $1.0 million in earnings, or Company B, with $10.0 million in earnings? It’s hard to say. However, if Company A earns a ROA of 25%, while Company B earns a ROA of 2%, the decision becomes clear.

Liquidity ratios provide clues to how effectively the company manages its cash collection cycle. Asset turnover ratios reveal how efficiently the company uses its assets to generate profits. Debt management ratios reveal how leveraged a company is, which provides an indication of future risk. Taken together, a company’s ratios and its ratios compared to the industry competitors provide important insight to the investment strength of the company’s stock. In this assignment, you will review the trend in your chosen company’s financial ratios over the past 3 years and compare your chosen company’s ratios to the average ratios from top competitors in the industry.

Prepare:

Prior to beginning work on this assignment,

• Make sure you have completed the Company Ratios: Appendix C and Industry Competitor Ratios: Appendix D assignments. It is recommended that you keep those two PDFs open or printed when completing this assignment.
• Review Chapter 11 in Essentials of finance.
• Review the Week 2 Model Assignment (Links to an external site.).

Write:

In your paper, address the following four parts in a Word document:

Part 1: (three to five paragraphs)

• Summarize the trends in your company’s ratio performance over the 3 most recent years. Be sure to address the following ratios included in Appendix C:

  Profitability ratios: ROA, ROE, return on investment (ROI).
  Liquidity ratios: quick ratio, current ratio.
  Debt management ratios: long-term debt to equity, total debt to equity, interest coverage ratio.
  Asset management ratios: total asset turnover, receivables turnover, inventory turnover, and accounts payable turnover.
  Per share: book value per share.

Part 2: (two paragraphs)

• Interpret whether the trend for each ratio (listed in Part 1) is an improvement or a decline in performance for the company.
• Create a table that lists each ratio as either a strength or a weakness in the most current year, based on its trend and your interpretation.
• Determine the overall financial strength of the company based on the ratios identified as either strengths or weaknesses.

  Consider all of the ratios discussed so far. Is the company’s strength the fact that the debt management ratios are improving? Or is it that the liquidity ratios are increasing? Is the company’s weakness that the turnover ratios are declining? Or is the company’s weakness that debt management ratios are weakening?
  Categorize the company’s overall ratio performance as either strong, neutral, or weak, based on your determination from the ratios.

Part 3: (one to two paragraphs)

• Compare your chosen company’s ratio performance to the industry competitor ratios in the most recent year based on Appendix D. Be sure to address the following ratios included on Appendix D:

  Profitability ratios: ROA, ROE, gross margin, and net margin.
  Liquidity ratios: quick ratio and current ratio.
  Debt management ratios: long-term debt to equity, total debt to equity, and interest coverage ratio.
  Asset management ratios: asset turnover and inventory turnover.

• Create a table that lists each ratio as either higher or lower than the average ratio for the competitors in the industry.

Part 4: (one paragraph)

• Categorize the company’s overall financial performance as either better than average, average, or worse than average compared to the industry based on the ratios.
• Interpret which ratios are the most important and explain your reasoning.
• Justify your conclusion based on the table you created, your interpretation of which ratios are the most important, and the company’s overall ratio performance compared to the industry competitors.

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The Section 2: Financial Ratio Analysis paper

• Must be two to three double-spaced pages in length including any tables or calculations (but not including title and references pages) and formatted according to APA Style (Links to an external site.) as outlined in the Writing Center’s APA Formatting for Microsoft Word (Links to an external site.)
• Must include a separate title page with the following:

  Title of paper in bold font

  Space should be between title and the rest of the information on the title page.

  Student’s name
  Name of institution (The University of Arizona Global Campus)
  Course name and number
  Instructor’s name
  Due date

• Must utilize academic voice. See the Academic Voice (Links to an external site.) resource for additional guidance.
• Must include a separate references page that is formatted according to APA Style as outlined in the Writing Center. See the APA: Formatting Your References List (Links to an external site.) resource in the Writing Center for specifications.
• Must cite where the financial statement information comes from (i.e., Mergent)

  For help citing the information from Mergent, see the BUS401: Principles of Finance Research Guide.

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Apple Inc (NMS: AAPL)

* all results are stated in US

Dollars

Target Country (United States)

Peer Grouping by: NAIC

Peer Scope: country

Company Name ROA %

(Net) –

latest

ROE %

(Net) –
latest

Gross

Margin %

– latest

Net Profit

Margin %
– latest

Quick

Ratio –

latest

Current

Ratio –
latest

LT Debt

to

Equity –

latest

Total

Debt to

Equity –
latest

Interest

Coverage

– latest
Total

Asset

Turnover –

latest

Inventory

Turnover –
latest

Apple Inc 28.13 147.85 41.78 25.88 0.91 1.07 1.73 1.98 – 1.09 40.03

CommScope Holding Co Inc -4.08 -35.37 32.57 -6.80 1.02 1.72 6.79 6.82 – 0.60 5.51

DISH Network Corp 4.92 13.87 35.24 11.38 0.79 1.15 0.99 1.14 – 0.43 28.54

EchoStar Corp -0.56 -1.11 60.57 -2.13 1.91 2.04 0.42 0.68 1.04 0.26 –

L3Harris Technologies Inc 2.98 5.18 29.17 6.15 0.62 1.57 0.33 0.33 4.83 0.48 11.76

Motorola Solutions Inc 8.80 – 48.66 12.80 0.76 1.24 – – 6.06 0.69 7.97

Qwest Corp 8.59 16.84 72.72 23.34 0.10 0.14 0.24 0.44 7.68 0.37 –

Sinclair Broadcast Group Inc -15.66 NM 98.47 -40.62 2.24 3.11 – – – 0.39 –

Skyworks Solutions Inc 21.94 31.76 49.18 29.33 2.70 4.35 0.42 0.42 132.19 0.75 3.07

Viasat Inc 0.07 0.17 30.66 0.16 0.74 1.40 0.77 0.78 1.81 0.44 4.96

Average 5.51 22.40 49.90 5.95 1.18 1.78 1.46 1.57 25.60 0.55 14.55

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Apple Inc (NMS: AAPL)

Exchange rate used is that of the Year End reported date

Profitability Ratios 09/25/2021 09/26/2020 09/28/2019
ROA % (Net) 28.13 17.38 15.74

ROE % (Net) 147.85 73.89 56.07

ROI % (Operating) 59.77 35.33 30.51

EBITDA Margin % 32.88 28.14 29.56

Calculated Tax Rate % 13.3 14.43 15.94

Revenue per Employee 2381961 1872579 1904298

Liquidity Ratios 09/25/2021 09/26/2020 09/28/2019
Quick Ratio 0.91 1.22 1.38

Current Ratio 1.07 1.36 1.54

Net Current Assets % TA 2.67 11.83 16.87

Debt Management 09/25/2021 09/26/2020 09/28/2019
LT Debt to Equity 1.73 1.51 1.01

Total Debt to Equity 1.98 1.72 1.19

Asset Management 09/25/2021 09/26/2020 09/28/2019
Total Asset Turnover 1.09 0.83 0.74

Receivables Turnover 8.25 6.61 5.5

Inventory Turnover 40.03 41.52 40.13

Accounts Payable Turnover 7.56 6.22 5.11

Property Plant & Equip Turnover 9.63 7.43 6.63

Cash & Equivalents Turnover 10.06 6.34 6.98

Per Share 09/25/2021 09/26/2020 09/28/2019
Cash Flow per Share 6.25 4.66 3.77

Book Value per Share 3.84 3.85 5.09

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Apple Inc (NMS: AAPL)

Company Financials

Income Statement

Exchange rate used is that of the

Year End reported date

As Reported Annual Income

Statement

Report Date 09/25/2021 09/26/2020 09/28/2019

Currency USD USD USD

Audit Status Not Qualified Not Qualified Not Qualified

Consolidated Yes Yes Yes

Scale Thousands Thousands Thousands

Products 2973,92,000$ 2207,47,000$ 2138,83,000$

Services 684,25,000$ 537,68,000$ 462,91,000$

Net sales 3658,17,000$ 2745,15,000$ 2601,74,000$

Cost of sales – products 1922,66,000$ 1512,86,000$ 1449,96,000$

Cost of sales – services 207,15,000$ 182,73,000$ 167,86,000$

Cost of sales 2129,81,000$ 1695,59,000$ 1617,82,000$

Gross margin 1528,36,000$ 1049,56,000$ 983,92,000$

Research & development expense 219,14,000$ 187,52,000$ 162,17,000$

Selling, general & administrative expense 219,73,000$ 199,16,000$ 182,45,000$

Total operating expenses 438,87,000$ 386,68,000$ 344,62,000$

Operating income (loss) 1089,49,000$ 662,88,000$ 639,30,000$

Interest & dividend income 28,43,000$ 37,63,000$ 49,61,000$

Interest expense 26,45,000$ 28,73,000$ 35,76,000$

Other income (expense), net 60,000$ -87,000 $ 4,22,000$

Other income/(expense), net 2,58,000$ 8,03,000$ 18,07,000$

Income (loss) before provision for income taxes1092,07,000$ 670,91,000$ 657,37,000$

Current federal income tax expense (benefit) 82,57,000$ 63,06,000$ 63,84,000$

Deferred federal income tax expense (benefit)-71,76,000 $ -36,19,000 $ -29,39,000 $

Total federal income tax expense (benefit) 10,81,000$ 26,87,000$ 34,45,000$

Current state income tax expense (benefit) 16,20,000$ 4,55,000$ 4,75,000$

Deferred state income tax expense (benefit) -3,38,000 $ 21,000$ -67,000 $

Total state income tax expense (benefit) 12,82,000$ 4,76,000$ 4,08,000$

Current foreign income tax expense (benefit) 94,24,000$ 31,34,000$ 39,62,000$

Deferred foreign income tax expense (benefit)27,40,000$ 33,83,000$ 26,66,000$

Total foreign income tax expense (benefit) 121,64,000$ 65,17,000$ 66,28,000$

Provision for (benefit from) income taxes 145,27,000$ 96,80,000$ 104,81,000$

Net income (loss) 946,80,000$ 574,11,000$ 552,56,000$

Weighted average shares outstanding – basic167,01,272 173,52,119 184,71,336

Weighted average shares outstanding – diluted168,64,919 175,28,214 185,95,652

Year end shares outstanding 164,26,786 169,76,763 177,72,944

Net earnings (loss) per share – basic 5.670$ 3.310$ 2.993$

Net earnings (loss) per share – diluted 5.610$ 3.280$ 2.973$

Cash dividends declared per share – 0.795$ 0.750$

Number of full time employees 154000 147000 137000

Number of common stockholders 23502 22797 23233

Foreign currency translation adjustments – 88000 -408000

Balance Sheet

Exchange rate used is that of the
Year End reported date

As Reported Annual Balance

Sheet

Report Date 09/25/2021 09/26/2020 09/28/2019
Currency USD USD USD
Audit Status Not Qualified Not Qualified Not Qualified
Consolidated Yes Yes Yes
Scale Thousands Thousands Thousands

Cash & cash equivalents 349,40,000$ 380,16,000$ 488,44,000$

Marketable securities 276,99,000$ 529,27,000$ 517,13,000$

Accounts receivable, net 262,78,000$ 161,20,000$ 229,26,000$

Inventories 65,80,000$ 40,61,000$ 41,06,000$

Vendor non-trade receivables 252,28,000$ 213,25,000$ 228,78,000$

Other current assets 141,11,000$ 112,64,000$ 123,52,000$

Total current assets 1348,36,000$ 1437,13,000$ 1628,19,000$

Marketable securities 1278,77,000$ 1008,87,000$ 1053,41,000$

Land & buildings 200,41,000$ 179,52,000$ 170,85,000$

Machinery, equipment, & internal-use software786,59,000$ 752,91,000$ 697,97,000$

Leasehold improvements 110,23,000$ 102,83,000$ 90,75,000$

Gross property, plant & equipment 1097,23,000$ 1035,26,000$ 959,57,000$

Accumulated depreciation & amortization 702,83,000$ 667,60,000$ 585,79,000$

Property, plant & equipment, net 394,40,000$ 367,66,000$ 373,78,000$

Other non-current assets 488,49,000$ 425,22,000$ 329,78,000$

Total non-current assets 2161,66,000$ 1801,75,000$ 1756,97,000$

Total assets 3510,02,000$ 3238,88,000$ 3385,16,000$

Accounts payable 547,63,000$ 422,96,000$ 462,36,000$

Deferred revenue 76,12,000$ 66,43,000$ 55,22,000$

Other current liabilities 474,93,000$ 426,84,000$ 377,20,000$

Commercial paper 60,00,000$ 49,96,000$ 59,80,000$

Term debt 96,13,000$ 87,73,000$ 102,60,000$

Total current liabilities 1254,81,000$ 1053,92,000$ 1057,18,000$

Floating & fixed-rate notes 1180,63,000$ 1060,78,000$ 1016,79,000$

Total debt 1180,63,000$ 1060,78,000$ 1016,79,000$

Unamortized discount -3,80,000 $ -3,14,000 $ -2,24,000 $

Hedge accounting fair value adjustments 10,36,000$ 16,76,000$ 6,12,000$

Less: current portion of long-term debt 96,13,000$ 87,73,000$ 102,60,000$

Term debt 1091,06,000$ 986,67,000$ 918,07,000$

Long-term taxes payable 246,89,000$ 281,70,000$ 295,45,000$

Other non-current liabilities 286,36,000$ 263,20,000$ 209,58,000$

Other non-current liabilities 533,25,000$ 544,90,000$ 505,03,000$

Total non-current liabilities 1624,31,000$ 1531,57,000$ 1423,10,000$

Total liabilities 2879,12,000$ 2585,49,000$ 2480,28,000$

Common stock 573,65,000$ 507,79,000$ 451,74,000$

Retained earnings 55,62,000$ 149,66,000$ 458,98,000$

Cumulative foreign currency translation – -13,75,000 $ -14,63,000 $

Unrecognized gains (losses) on derivative instruments – -8,77,000 $ 1,72,000$

Unrealized gains (losses) on marketable securities – 18,46,000$ 7,07,000$

Accumulated other comprehensive income (loss)1,63,000$ -4,06,000 $ -5,84,000 $

Total shareholders’ equity 630,90,000$ 653,39,000$ 904,88,000$

Cash Flows

Exchange rate used is that of the
Year End reported date

As Reported Annual Cash Flow

Report Date 09/25/2021 09/26/2020 09/28/2019
Currency USD USD USD
Audit Status Not Qualified Not Qualified Not Qualified
Consolidated Yes Yes Yes
Scale Thousands Thousands Thousands
Net income (loss) 946,80,000$ 574,11,000$ 552,56,000$

Depreciation & amortization 112,84,000$ 110,56,000$ 125,47,000$

Share-based compensation expense 79,06,000$ 68,29,000$ 60,68,000$

Deferred income tax expense (benefit) -47,74,000 $ -2,15,000 $ -3,40,000 $

Other adjustments -1,47,000 $ -97,000 $ -6,52,000 $

Accounts receivable, net -101,25,000 $ 69,17,000$ 2,45,000$

Inventories -26,42,000 $ -1,27,000 $ -2,89,000 $

Vendor non-trade receivables -39,03,000 $ 15,53,000$ 29,31,000$

Other current & non-current assets -80,42,000 $ -95,88,000 $ 8,73,000$

Accounts payable 123,26,000$ -40,62,000 $ -19,23,000 $

Deferred revenue 16,76,000$ 20,81,000$ -6,25,000 $

Other current & non-current liabilities 57,99,000$ 89,16,000$ -47,00,000 $

Net cash flows from operating activities 1040,38,000$ 806,74,000$ 693,91,000$

Purchases of marketable securities -1095,58,000 $ -1149,38,000 $ -396,30,000 $

Proceeds from maturities of marketable securities590,23,000$ 699,18,000$ 401,02,000$

Proceeds from sales of marketable securities474,60,000$ 504,73,000$ 569,88,000$

Payments made in connection with business acquisitions, net-33,000 $ -15,24,000 $ -6,24,000 $

Purchases of non-marketable securities -1,31,000 $ -2,10,000 $ -10,01,000 $

Proceeds from non-marketable securities 3,87,000$ 92,000$ 16,34,000$

Payments for acquisition of property, plant & equipment-110,85,000 $ -73,09,000 $ -104,95,000 $

Other cash flow from investing activities -6,08,000 $ -7,91,000 $ -10,78,000 $

Net cash flows from investing activities -145,45,000 $ -42,89,000 $ 458,96,000$

Proceeds from issuance of common stock 11,05,000$ 8,80,000$ 7,81,000$

Payments for taxes related to net share settlement of equity awards-65,56,000 $ -36,34,000 $ -28,17,000 $

Payments for dividends & dividend equivalents-144,67,000 $ -140,81,000 $ -141,19,000 $

Repurchases of common stock -859,71,000 $ -723,58,000 $ -668,97,000 $

Proceeds from issuance of term debt, net 203,93,000$ 160,91,000$ 69,63,000$

Repayments of term debt -87,50,000 $ -126,29,000 $ -88,05,000 $

Proceeds from/(repayments of) commercial paper, net10,22,000$ -9,63,000 $ -59,77,000 $

Other cash flows from financing activities -1,29,000 $ -1,26,000 $ -1,05,000 $

Net cash flows from financing activities -933,53,000 $ -868,20,000 $ -909,76,000 $

Net increase (decrease) in cash, cash equivalents & restricted cash-38,60,000 $ -104,35,000 $ 243,11,000$

Cash, cash equivalents & restricted cash, beginning balances397,89,000$ 502,24,000$ 259,13,000$

Cash, cash equivalents & restricted cash, ending balances359,29,000$ 397,89,000$ 502,24,000$

Cash paid (received) for income taxes, net 253,85,000$ 95,01,000$ 152,63,000$

Cash paid for interest 26,87,000$ 30,02,000$ 34,23,000$