Financial Management Study Material

This study material provides an in-depth analysis of the financial position of Apple Inc. It covers topics such as vertical analysis, horizontal analysis, ratio analysis, and more. The material also includes an HR dashboard with data on absenteeism, employee gender distribution, and net pay.

Financial
Management

TABLE OF CONTENTS
1. Introduction to the financial position of Apple Inc................................................................3
Vertical analysis.....................................................................................................................3
Horizontal analysis.................................................................................................................4
Ratio analysis.........................................................................................................................5
2. HR dashboard.........................................................................................................................8
3. Performance Management at Vitality Health Enterprises, Inc.............................................11
4. HR problem and Solution.....................................................................................................12
5. HR investment analysis........................................................................................................14
REFERENCES.........................................................................................................................16
APPENDIX..............................................................................................................................17

1. Introduction to the financial position of Apple Inc.
Vertical analysis
Vertical Analysis (All values USD Millions)
2020 2019 2018 2017
Revenue 2,74,515 100% 2,59,968 100% 2,65,809 100% 2,28,572 100%
Cost of Sales 1,69,559 62% 1,62,264 62% 1,63,826 62% 1,41,702 62%
Gross Profit 1,04,956 38% 97,704 38% 1,01,983 38% 86,870 38%
SG&A Expense 38,668 14% 34,462 13% 30,941 12% 26,842 12%
EBIT 66,288 24% 63,242 24% 71,042 27% 60,028 26%
Tax 8,877 3% 7,986 3% 11,511 4% 11,677 5%
Profit after tax 57411 21% 55256 21% 59531 22% 48351 21%
Interpretation: It can be stated that in every year the cost of sales of the company is 62% of
its sales which has remained constant in the last 4 years which ahs resulted into same 38% of
gross profit as a percentage of sales (Bugreev, 2016). There is an increase in the SG&A
expenses of the Apple company over the years from 12% to 14% in 2020. The net profit of
the company has remained constant as well.
Vertical Analysis (All values USD Millions)
2020 2019 2018 2017
Assets
Cash & Short-Term
Investments
90,94
3 28%
1,00,5
80 30%
66,3
01 18%
74,18
1
20
%
Accounts Receivable
37,44
5 12%
45,80
4 14%
48,9
95 13%
35,67
3
10
%
Inventories 4,061 1% 4,106 1%
3,95
6 1% 4,855 1%
Total Current Assets
1,43,7
13 44%
1,62,8
19 48%
1,31,
339 36%
1,28,6
45
34
%
0% 0% 0% 0%
Net Property, Plant &
Equipment 36,766 11% 37,378 11%
41,30
4 11% 33,783 9%
Investments and
Advances
10088
7 31%
10669
8 32%
1707
99 47%
19471
4
52
%
Intangible Assets 0% 0% 0% 8,015 2%
Other Assets 42522 13% 31621 9%
2228
3 6% 10162 3%
Total Assets
32388
8 100%
33851
6
100
%
3657
25 100%
37531
9
100
%
Liabilities &
Shareholders' Equity
ST Debt & Current
Portion LT Debt 13769 4.25% 16240
4.80
%
2074
8 5.67% 18473
4.92
%

Accounts Payable 42296
13.06
% 46236
13.66
%
5588
8
15.28
% 49049
13.0
7%
Other Current Liabilities 49327
15.23
% 43242
12.77
%
4023
0
11.00
% 33292
8.87
%
Total Current Liabilities
10539
2
32.54
%
10571
8
31.23
%
1168
66
31.95
%
10081
4
26.8
6%
0.00%
0.00
% 0.00%
0.00
%
Long-Term Debt 98667
30.46
% 91807
27.12
%
9373
5
25.63
% 97207
25.9
0%
Provision for Risks &
Charges 0.00% 29545
8.73
%
3358
9 9.18%
0.00
%
Deferred Taxes 0.00% 16919
5.00
%
1152
0 3.15% 39911
10.6
3%
Other Liabilities 54490
16.82
% 4039
1.19
% 71 0.02% 504
0.13
%
Total Liabilities
25854
9
79.83
%
24802
8
73.27
%
2585
78
70.70
%
24127
2
64.2
8%
0.00%
0.00
% 0.00%
0.00
%
Total Shareholders'
Equity 65339
20.17
% 90488
26.73
%
1071
47
29.30
%
13404
7
35.7
2%
0.00%
0.00
% 0.00%
0.00
%
Liabilities &
Shareholders' Equity
32388
8
100.00
%
33851
6
100.0
0%
3657
25 100%
37531
9
100
%
Interpretation: The current assets of the organization has increased over the period has been
fluctuating over the period. But in comparison to current liabilities the current assets are
more. The current obligations of the company have shown an increase in trend. The total
shareholder’s fund accounts for 20.17% of total liabilities which has reduced.
Horizontal analysis
Horizonal analysis
2020 2019 2018
201
7
Revenue 20.10% 13.74%
16.29
%
Cost of Sales 19.66% 14.51%
15.61
%
Gross Profit 20.82% 12.47%
17.40
%
SG&A Expense 44.06% 28.39%
15.27
%
Profit before interest and tax 10.43% 5.35%
18.35
%
Tax
-
23.98%
-
31.61% -1.42%
Profit after tax 18.74% 14.28% 23.12

%
Interpretation: The sales of Apple company has been fluctuating but is positive in 2020 and
there has been an increase in COS as there is increase in sales (Haber and Schryver, 2019).
The GP of the company has increased 20.83% as against 2019 and the NP has shown an
upward trend which is favourable for the company.
2020 2019 2018 2017
Assets
Cash & Short-Term Investments 23% 36% -11%
Accounts Receivable 5% 28% 37%
Inventories -16% -15% -19%
Total Current Assets 12% 27% 2%
Net Property, Plant & Equipment 9% 11% 22%
Investments and Advances -48% -45% -12%
Intangible Assets -100%
-
100
% -100%
Other Assets 318%
211
% 119%
Total Assets -14% -10% -3%
Liabilities & Shareholders'
Equity
ST Debt & Current Portion LT
Debt -25% -12% 12%
Accounts Payable -14% -6% 14%
Other Current Liabilities 48% 30% 21%
Total Current Liabilities 5% 5% 16%
Long-Term Debt 2% -6% -4%
Provision for Risks & Charges
Deferred Taxes -100% -58% -71%
Other Liabilities
10712
%
701
% -86%
Total Liabilities 7% 3% 7%
Total Shareholders' Equity -51% -32% -20%
Liabilities & Shareholders'
Equity -14% -10% -3%

Interpretation: There is huge decline in % change in the current assets of the company in
comparison to the previous year and there is overall a decrease in total assets. The total
liabilities of the company have increased by 7% taking 2017 as the base year.
Ratio analysis
Current and quick ratio:
The current and quick ratio of the company is very good which indicates that
company has effectively managed its current assets and obligations which helps it in
smoothly meeting with its short-term requirements (Andesfa and Masdupi, 2019). The
company is blocked less amount in its invested which is good.
2020 2019 2018 2017
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
Current ratio Quick Ratio
ROCE and ROE:
The ROCE of the company ahs shown an increase in trend over the year as it has
grown from 21.87% to 30.34% in the year 2020 which makes it attractive for investment
purpose (Zimon, 2018). Along with that, the ROE of the company has been growing
indicating the effectiveness of the company in repaying good return to its shareholders. This
makes the financial position of the company sound.

2020 2019 2018 2017
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Return on capital employed Return on Equity
Gross profit and net profit margin:
The GP margin of Apple company has increased while the NP margin has remained
stable (Apple Inc. 2020). This has mainly because there is no much change in the sales, COS
and net profit of the company. This indicates that the company is having steady income
which depicts it can effectively carry out its business.
2020 2019 2018 2017
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
38.23% 37.58% 38.37% 38.01%
24.15% 24.33%
26.73% 26.26%
Gross Margin Net profit ratio
Turnover ratios:
The asset turnover ratio of the company is lower which convey that company is not
effective in utilizing its assets in generating revenue (Malik, 2017). Along with that,
inventory turnover ratio is very low to 0.64 times indicating inefficiency of the company in

selling out its inventory. Accounts receivable turnover ratio is also less which means that
company is not able to recover the amount from its debtor on time.
2020 2019 2018 2017
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
1.26
1.38 1.34
1.74
0.64
0.40
0.49
0.280.29 0.25
0.35 0.31
Asset turnover ratio
Inventory turnover ratio
Account receivable turnover ratio
Equity asset ratio:
This ratio has declined over the period from 35.72% in 2017 to 20.17% in the year
2020. This means that company is effectively making use of its shareholder’s fund in meeting
with its requirement and using less debt component in dealing (Shaik, 2018). This simply
reduces the risk factor for the company.
2020 2019 2018 2017
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
20.17%
26.73%
29.30%
35.72%
Equity asset ratio
Thus, the overall financial position of the company is moderate and it is expected
that it will improve in future if proper actions are undertaken.

2. HR dashboard
1 Absenteeism data for all three years Year 2016, 2017, 2018
0
2
4
6
8
10
12
14
20
55
100
230
0
200
400
600
800
1000
1200
1400
Total
Total
2. Employees on the basis of gender
Particulars 2016 2017 2018
? 42 53 56
Male 1925 1999 2047
Female 712 747 777
3. Net pay of employees
For 2016
0
1500
1600
1700
1800
1900
2000
2100
2400
2700
3000
3200
3400
3600
3800
4000
0
50
100
150
200
250
300
350
400
Total
Total
For 2017

€ 1,500
€ 1,650
€ 1,760
€ 1,870
€ 1,980
€ 2,090
€ 2,200
€ 2,400
€ 2,700
€ 3,000
€ 3,300
€ 3,520
€ 3,740
€ 4,000
€ 4,400
0
50
100
150
200
250
300
350
400
Total
Total
For 2018
€ 1,500
€ 1,650
€ 1,760
€ 1,815
€ 1,900
€ 1,980
€ 2,057
€ 2,100
€ 2,200
€ 2,310
€ 2,420
€ 2,640
€ 2,904
€ 3,000
€ 3,267
€ 3,520
€ 3,630
€ 3,872
€ 4,000
€ 4,356
€ 4,598
0
50
100
150
200
250
300
350
Total
Total
From the dashboard it is analyzed that absenteeism within the company is decreases and this
clearly reflected that employees are quite happy with the working environment of the
company. Also, by comparing it with the last 2 years, it has been interpreted that the
absenteeism is decreases from the last year. The main reason is HR put extra efforts in order
to improve the performance of the employees and also develop many training system for self-
development. Moreover, for a company it is quite necessary that employees do not take
leaves and this in turn improve the performance level of a firm as well as employees.
In addition to this, another HR practice is related to recruitment and selection. As per
the data provided it is interpreted that there is low number of female employees as compared
to men. Such that it is examine by comparing with 2 years such that in 2016 the female
employees were 712 over 1925 males. On the other side, in 2017 the female employees

increase but there is no proper ratio define. Thus, it is stated that there is a gender inequality
while recruiting the employees such that HR prefer to have a male employees over female
which is not true as per the eyes of laws. That is why, there is a need to minimize the issues
because in every company, equality act must be complied where both male and female are
treated in proper manner. Also, HR are also never discriminated female candidate during
recruitment process.
Further, the data clearly exhibit that the number of female employee increases over
the time but in the same time male employees are also increases which is clearly shows that
there is no proper ratio described while recruiting the male and female employees. Hence,
there is a need to solve the problem which in turn affect the overall performance of the
employees along with company.
Through the third topic of HR dashboard, net pay of employees which is also set by
HR of a firm. HR of a firm set the salary on the basis of capabilities of an employees and in
the same way, from the graphical representation it is examine that there is no proper trend
describe by the HR. While on the other hand, it is analyzed that in 2016, there is a huge
fluctuation on the net payment of workers but this is decreased over the time. Therefore, it is
reflected that there is no proper trend or relationship between the employee’s salary and they
earn on the basis of their own competence and capabilities. Thus, the dashboard compares the
HR main topics from past years in order to determine the exact performance and trends
within business.
3. Performance Management at Vitality Health Enterprises, Inc.
Vitality health enterprises, Inc. is facing rapid success since long time and climbing the stairs
of success with a high pace in terms of revenue growth that has surpassed the expectations of
analyst. But unfortunately the company became exposed to volatility and uncertainty and for
that the corrective actions must be taken in order to enhance the profitability. Due to increase
in the cost of research and development, the employees became relaxed which lead to
ineffective performance management due to which the marketing team missed various
product launches. The company struggled in order to maintain its position in the competitive
market in terms of innovation and also the employee turnover was increasing day by day
especially in cases of highly talented research scientists (Luz, Penedo and Pereira, 2020).
This created a stress for the company as it is impossible to remain vibrant without those.

There was a need for an effective performance management evaluation team. Because in
order to compete in the emerging markets, the product engineers must be motivated. The
company also ensures that the performance management team must be able to generate
outcomes according to the expectations. The CEO of the company also introduced a
committee to review the policies and strategies in order to track the performance goals of all
the non-sales and the non-executive employees from the company. Though the performance
management has helped in increasing the productivity and the overall sales but also raised
many challenges for more than 2,500 professional staff including the scientists and the
engineers along with the product managers who worked in research and development labs
(Glowka, Kallmünzer and Zehrer, 2020). This also led to managerial abuses which affected
the overall culture of the organisation.
The company Vitality benchmarked compensation for keeping the pay policy line regarding
the compensation. This helped in gaining actual compensation figures which resulted in
results higher than competition. This heightened pay resulted in the less turnover but there
were no provisions made like bonuses or any other form of compensation. While no
employees complained about the individual pay check, but the system of the company itself
faced many issues in rewarding the top performers and terminating the low performers. This
forced the most of the employees to leave the job and finding greater job prospects.
Due to all these issues, the CEO of the company decided to revise the overall performance
management system and start rewarding the top performers which can help the company to
accelerate its growth by attracting the talented candidates and helps in retaining those who
contribute towards the organisational goals (Obondo, 2018). The main objective beside this
was to identify the low performers so that proper trainings can be provided to them. Overall
the main objective behind this was to improve the performance of the employees by assessing
the attributes and integrate them with the strategic goals of Vitality. The company also revise
the evaluation criteria and the manager’s tool in the performance appraisal and also new
compensation tools were developed beyond the salaries. After that, the company provided
incentives to the employees and which resulted in the rapid growth of the company which in
turn helped the company to compete with its competitors.
4. HR problem and Solution
The HR problem in the company was identified that the HR does not recruits the equal
proportion of males and females in the company which led to disturbed outcomes. This also

creates a sense of discrimination in the company which affects the overall culture. When the
HR of the company selects 2000 males on the other hand the females selected are only 700.
The reason behind recruiting less number of females is that the HR believes the males can
contribute more in the organisational goals as they can work after the regular hours and also
in the part time (Devkota and et.al., 2018). So, they think that it becomes easy for the
company to handle the working timings of males as compared to females. The strategy
behind this is that in the normal working hours the females can work effectively and in the
late timings and part timings the males can perform the tasks. But this strategy is not proving
beneficial to improve the organisational culture as the females realize that the company is
doing biasness with them in giving more opportunities.
The solution to this problem is that the HR of the company must try to recruit equal number
of males and females. This can be possible only when there is an effective strategic plan
made whose monitoring and control will be necessary for its effective implementation. The
HR practice of recruitment and selection must focus on the gender equality and the
interviewers must take unbiased decision for both males and females. The company must also
have equal number of vacant seats for both the genders. If there are 100 males, then the
company must strive hard to recruit 100 females so that there is an equal ratio of both the
genders (Edmiston and et.al., 2016).
According to the Harvard model, (Healy and et.al., 2018)
HRM outcomes: The outcomes which benefits the HR are commitment to the strategy and
its effective implementation, competence, cost-effectiveness and congruence. The HR will be
considered as unbiased which enhances its goodwill and they can recruit the best and talented
candidates from the pool of candidates. There will be jo gender discrimination which affects
the HR to easily make the decisions regarding the payments, performance appraisal etc. It
becomes much easy for the HR to implement its practices of training and development as the
similar trainings can be given to the employees working in same department regardless of
their gender. It also improves the employee relations with the HR of the company.
Organizational outcomes: It will also lead to productivity and profitability of the
organization as the customers are attracted towards the company which does not exercise
gender discrimination. The females also get the equal opportunities which must be given as it
is also stated in many laws of government. So, the goodwill of the company increases which

helps in increasing market share. It will also help in innovation as the females are able to give
as creative ideas and opinions as males can. It also helps in aligning the organizational goals
with the employees’ performance.
Financial outcomes: Increased profits, return on investments (ROI), increasing market
share.
5. HR investment analysis
HR invests in training and development of employees, invest in new software or
technology that could used to maintained data, relevant information about employees and
recruitment and selection process. By making investment in several alternatives it is able to
enhance overall performance and productivity of organisation. HR investment can also be
analysed by measuring brand image and reputation of enterprise in external environment.
Customer satisfaction level and profit margin of firm during particular year are also used as
indicator for effective HR investment analysis. Therefore Hr investment analysis can be made
by analysing increase/ decrease in employee’s performance, employee retention ratio and
growth in productivity of firm (Elrehail and et.al., 2019).
CONCLUSION
HR main objectives are to retained highly talented employees, manage diverse
individuals or make optimum utilisation of human resources so that company can gain
competitive advantages. It is target provide safe, secure working environment and coordinate
several individual to work in a team rather than individuals for achievements of common
goals. HR outcome can be measured by comparing performance of employees, their
satisfaction level and retention ration. In order to achieve predetermined goals, there are
several initiatives which have been taken by HR manager of organization such as it have
make use of motivational theories, organize training and develop program and organized
social- friendly environment so that employees are free to share their view with each others.
It has also taken initiative to set strict rules and regulations, ensures definite organization
structure, and distribute task and responsibilities that need to be performed by each
individual. Promotion and financial increment or incentives are some other initiatives;
supportive working environment is another initiative which have been taken by HR manager
for growth of enterprise.

HR interventions: These are several strategies or key actions that are used by Human
resources manager to manage diverse individuals and achieve goals of firm (Aktar and
Pangil, 2018). For examples: HR of company has invested £ 1000 in training and
development program that have contributed in increasing overall profitability to £ 15000.
ROI = Profit earned/ Investment*100
ROI= £ 15000/1000* 100=£1500
So, it can be stated that HR strategy to investment in training and development to
enhance skills and capabilities of employees have lead to increase in return i.e., £1500.
Therefore, Hr manager needs to more emphasis on making investment or providing support,
guidance to employees about the way particular task need to be completed so that end
objectives can be achieved.

REFERENCES
Books and Journals
Aktar, A. and Pangil, F., 2018. Mediating role of organizational commitment in the
relationship between human resource management practices and employee
engagement. International Journal of Sociology and Social Policy.
Andesfa, D. and Masdupi, E., 2019, April. Effect of Financial Ratio on Profitability of
Comercial Banks: A Systematic Literature Review. In 2nd Padang International
Conference on Education, Economics, Business and Accounting (PICEEBA-2 2018).
Atlantis Press.
Bugreev, D. O., 2016. Financial analysis of small business enterprises. Contemporary
Problems of Social Work. 2(1). pp.28-35.
Devkota, H.R. and et.al., 2018. Are maternal healthcare services accessible to vulnerable
group? A study among women with disabilities in rural Nepal. PloS one. 13(7).
p.e.0200370.
Edmiston, E.K. and et.al., 2016. Opportunities and gaps in primary care preventative health
services for transgender patients: a systematic review. Transgender Health. 1(1).
pp.216-230.
Elrehail, H and et.al., 2019. Employee satisfaction, human resource management practices
and competitive advantage. European Journal of Management and Business
Economics.
Glowka, G., Kallmünzer, A. and Zehrer, A., 2020. Enterprise risk management in small and
medium family enterprises: the role of family involvement and CEO
tenure. International Entrepreneurship and Management Journal, pp.1-19.
Haber, J. and Schryver, C., 2019. How to create key performance indicators. The CPA
Journal. 89(4). pp.24-30.
Healy, P. and et.al., 2018. Identifying trial recruitment uncertainties using a James Lind
Alliance priority setting partnership–the PRioRiTy (Prioritising recruitment in
randomised trials) study. Trials. 19(1). p.147.
Luz, F.V., Penedo, A.S.T. and Pereira, V.S., 2020. Financial Performance Analysis of Private
Higher Education Companies/Análise do Desempenho Financeiro das Empresas
Privadas de Ensino Superior. Revista FSA (Centro Universitário Santo
Agostinho). 17(4). pp.21-38.
Malik, M. S., 2017. Financial statement analysis, internal controls, and audit readiness:
Bestpractices for Pakistan army financial management officers. Naval Postgraduate
School Monterey United States.
Obondo, F.D., 2018. Influence of Innovation Management Practices on Performance of Small
and Medium Enterprises in Construction Industry in Nairobi City. Journal of
International Business, Innovation and Strategic Management. 1(1). pp.168-187.
Shaik, S. B., 2018. FINANCIAL PERFORMANCE OF SANGAM DAIRY THROUGH
RATIO ANALYSIS. Editorial Board. 7(10). p.178.
Zimon, G., 2018, December. Strategies of Receivables Management in Multi-entity
Organizations. In Third International Conference on Economic and Business
Management (FEBM 2018). Atlantis Press.
Online
Apple Inc. 2020. [Online]. Available Through:<
https://www.wsj.com/market-data/quotes/AAPL/financials/annual/balance-sheet >.

APPENDIX
(All values USD
Millions) 2020 2019 2018 2017
Liquidity ratio
Current assets 143713 162819 131339 128645
Current liability 105392 105718 116866 100814
Inventory 4061 4106 3956 4855
Quick Assets 139652 158713 127383 123790
Current ratio
Current assets /
current liabilities 1.36 1.54 1.12 1.28
Quick Ratio
(Current Assets -
Inventory) / Current
Liabilities 1.33 1.50 1.09 1.23
Profitability ratio
Employed Capital 218496 232798 248859 274505
Net operating profit 66288 63242 71042 60028
Return on capital
employed
Net operating
profit/Employed
Capital 30.34% 27.17% 28.55% 21.87%
Net Income 57411 55256 59531 48351
Shareholder's Equity 65339 90488 107147 134047
Return on Equity
Net Income /
Shareholder's Equity 87.87% 61.06% 55.56% 36.07%
Cost of Sales 169559 162264 163826 141702
Sales 274515 259968 265809 228572
Gross Margin
Total Sales –
COGS/Total Sales 38.23% 37.58% 38.37% 38.01%
Operating profit 66288 63242 71042 60028
Sales 274515 259968 265809 228572
Net profit ratio
Operating Income/
Net Sales 24.15% 24.33% 26.73% 26.26%
Efficiency Ratios
Inventory 4061 4106 3956 4855

Trade Receivables 37445 45804 48995 35673
Net Assets 323888 338516 365725 375319
Cost of Sales 169559 162264 163826 141702
Sales 274515 259968 265809 228572
Asset turnover ratio Sales / Net assets 0.85 0.77 0.73 0.61
Inventory turnover
ratio Sales / Inventory 41.75 39.52 41.41 29.19
Account receivable
turnover ratio
Sales / Accounts
Receivable 7.33 5.68 5.43 6.41
Debt
Total assets 323888 338516 365725 375319
Total Equity 65339 90488 107147 134047
Equity asset ratio
Total Shareholders'
Equity / Total Assets 20.17% 26.73% 29.30% 35.72%