Apple Inc. Financial Ratio Analysis

This report provides a financial analysis of Apple Inc. using various financial ratios. It assesses the company's performance over a two-year period, examining profitability, liquidity, and solvency. Specific ratios analyzed include the current ratio, debt ratio, time interest earned ratio, account receivable turnover ratio, average inventory turnover ratio, return on sales, asset turnover ratio, return on assets, and financial leverage. The analysis reveals that while Apple's profitability and asset utilization have improved, its liquidity position requires attention. The report also includes a DuPont analysis, breaking down the return on equity into its component parts to identify key drivers of performance. Overall, the report suggests that while Apple shows strong performance in certain areas, improvements in liquidity are needed to enhance stability and overall financial health.

PART –B
D. In the present case the company that is selected for the purpose of analyzing is Apple Inc. by
analyzing the data through different ratios which will able to comment whether the company
performance over the year has improved or not, profitability has increased or not and also on
other factors like liquidity etc. The different ratios that are prepared for the purpose of analysis is
current ratio which has decreased as compared to previous year and affects the firm liquidity
position other ratio that is chosen is Debt ratio which tells us the proportion of Debt on Total
assets and which has increased over the years from 0.6428 to 0.7070 which tell us that the
proportion of debt has increased more as compared to increase in proportion of Debt and it is
riskier for the company.
The profitability ratio tells us the company performance over the year which tells us that the
company has maintained on an average the same amount of profit in both the years and Time
interest earned ratio tells us that the how many times earnings are available to cover the interest
expense and from the analysis of two years it can be said that it has decreased over the years
which is riskier for the company.
The account receivable turnover ratio tell us the proportion of days in which the credit sales of
the company is recovered and from the analysis it can be seen that the no. of days to recover the
amount has decreased which is good for the company and should work more in order to improve
the liquidity of the company. The average Inventory turnover ratio tells us how many times the
company is able to sold its average Inventory over the years which has been increased
considerably by analyzing the data of past two years from 29.0521 to 41.3943 which tell us that
the company performance has increased and high ratio implies good for the company. The other
ratio that is taken for the purpose of evaluation is Return on sales which tell us the Net income
that is earned on the sales of the company and are able to analyze the performance by comparing
the return with some other company so as to able to compare and find out ways to improve the
company performance and optimum return that should be earned by the company in the same
field.
Asset turnover ratio means ratio which shows us that how effectively the company uses it assets
to generate the sales of the company and higher ratio is always favorable for the company which
shows us that the company has utilized its asset more efficiently and whereas on the other hand
lower ratio implies the utilization of asset not so efficiently and has to take steps so as to increase
the utilization of the asset and enhance the company performance which in the present case has
increase from 0.6108 to 0.7262 which shows that the utilization of asset has increased by the
company over the years and it is favorable for the company. Return on assets which the return
which the company has earned on the average assets that is employed in the company and higher
ratio means favorable for the company and whereas the lower ratio implies that the company is
earning optimum return on its asset and have to work in order to increase the return on the assets
employed in the company and which in the present case has increased from 12.8826 to 16.2775
which is favorable for the company and has tells us that the company performance has increased
over the years.
The above ratio tells us the company position in terms of solvency, liquidity and performance in
terms of return that is earned by the company whether it is reasonable or not. The company
solvency is analyzed by finding out ratio which is known as financial leverage which tells us the

amount of debt which is utilized for the purpose of acquiring assets of the company or in order to
invest in the company for any purpose. This ratio tells us the company dependability on the
outside funds which tells us the company is more riskier as the interference of outsider is more if
the proportion of debt in the company is more than the funds employed by the shareholders
which in the present case tells us that by analyzing the financial leverage over the past two years
it can be seen that the portion of debt expense has increased over the years which is riskier for
the company and it is not good for the purpose of analyzing the company liquidity position.
The other ratio that is also analyzed in order to find out how much the shareholder has earned on
the amount invested by him in the company which is analyzed in the present case can be seen
that the return has increased over the year from 36.0702 to 55.5601 which is good for the
company as well as for the shareholder as the it tells us the return that is earned on funds
employed in the company.
There is also other analysis which is DuPont analysis which analysis the return on equity in
detail by examining which factors has affected more on return on equity which is Net profit
margin, Asset turnover and Leverage factor which tells us that which factor has impacted major
on the return on Equity so that reason is able to find out and steps are to be taken to improve the
position of the company and this analysis uses both Income Statement and Balance Sheet for the
purpose of analysis.
The above analysis shows that the company performance is good in terms of return but the
liquidity position has to be work more in order to improve and also the liquidity position have to
be made more stronger than the current ratio so as to enhance the company performance and
improve the stability of the company.