Financial Analysis of Apple Inc.: Business Policy Seminar Report

This report presents a financial analysis of Apple Inc., focusing on key performance indicators derived from its financial statements. The analysis includes calculations and interpretations of Return on Assets (ROA), Return on Equity (ROE), Return on Capital (ROC), Gross Margin, SG&A Margin, Curren...Read More

Running head: BUSINESS POLICY SEMINAR
Business policy seminar
Name of the student
Name of the university
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Table of Contents
Return on assets..........................................................................................................2
Return on equity.........................................................................................................3
Return on capital........................................................................................................3
Gross margin..............................................................................................................3
SG&A margin............................................................................................................3
Current ratio...............................................................................................................4
Quick ratio..................................................................................................................4
Net debt to equity.......................................................................................................4
Total revenue..............................................................................................................4
Gross profit.................................................................................................................4
References......................................................................................................................5

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Return on assets
Return on assets is an indicator of how a company is relative to its total assets. ROA
gives a manager, investor or the analyst an idea as how efficiently a company’s agreement is
using the assets value to generate earnings. It is displayed in form of percentage. From the
financial statement of apple inc it can be seen that in the year 2018-19 the company’s return
on asset percentage is 16.07 which means that the companies asset acquisition is decreased
and it had affected the earnings (Hanlon et al.,2015).

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Return on equity
It measures the financial performance by dividing the net income by shareholders
equity. Because the shareholders equity is equal to the company’s asset minus debt. The ROE
can be calculated as the return on net assets. From the financial statement of apple the return
on equity percentage for current year is 49% which indicates a good amount of return from
net asset value (Tuffour & Oppong 2014).
Return on capital
It is a profitability ratio which generates return on investment for capital contributors
I.e. bondholders and the shareholders. It indicates the companies turning capital into profits.
The return on capital of apple in the current year is almost 25% which indicates decrease in
the investment value of assets. Hence it can affect the profitability.
Gross margin
It is the amount remaining after a retailers or manufactures cost of goods sold is
subtracted from the net sales value. These includes subtraction of selling, administrative and
other interest expenses. The value initiated from financial statement of apple had revealed
that in the current year the value is almost 39%. It indicates that amount of sales in the
financial year is marginally less and it had affected the profits of company (Khadafi et
al.,2014).
SG&A margin
It stands for selling, administrative and general expense. It is an operating expense to
promote, sell and deliver a company’s products and services as well as manage the overall
company. In the current year the selling and administrative expense of the company had
decreased to 6% which had highlighted overall profits of the company (Mankin, &
Jewell,2014)

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Current ratio
Current ratio is determined by the overall current assets and current liabilities of the
company which describes the financial stability of the business. The current ratio percentage
is 1:1. It is seen that in current year the company’s liability had increased. It means that the
company had not acquired new assets in the financial year.
Quick ratio
This ratio gauges the company’s liquidity and compares the total cash and cash
equivalent in the financial year. From the financial statement it can be seen that in the current
year the company’s liquid ratio is less than 1 which is a good sign from company’s point of
view.
Net debt to equity
It measures the ratio by dividing the company’s total liabilities by its shareholders
equity. It measures the degree to which the financing is done through debt and equity value.
The debt value is calculated at 0.79 which is less than 1 and it measures good profitability for
the company.
Total revenue
It defines the overall gross sales of the company in the financial year. In the current
year the company had been able to increase the sales value to $3 million which tells about
good financial position.
Gross profit
It is calculated by subtracting the total profit from net profit.

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References
Hanlon, M., Maydew, E. L., & Thornock, J. R. (2015). Taking the long way home: US tax
evasion and offshore investments in US equity and debt markets. The Journal of
Finance, 70(1), 257-287.
Khadafi, M., Heikal, M., & Ummah, A. (2014). Influence analysis of return on assets (ROA),
return on equity (ROE), net profit margin (NPM), debt to equity ratio (DER), and
current ratio (CR), against corporate profit growth in automotive in Indonesia Stock
Exchange. International Journal of Academic Research in Business and Social
Sciences, 4(12).
Mankin, J. A., & Jewell, J. J. (2014). A sorry state of affairs: The problems with financial
ratio education. Mankin, JA & Jewell, JJ (2014). A Sorry State of Affairs: The
Problems with Financial Ratio Education. Academy of Educational Leadership
Journal, 18(4), 195-219.
Tuffour, M., & Oppong, B. A. (2014). Profit efficiency in broiler production: Evidence from
Greater Accra region of Ghana. International Journal of Food and Agricultural
Economics (IJFAEC), 2(1128-2016-92023), 23-32.