Question

Assignment: Finance and Operations: This week we look at finance and operations, and apply a bit of quantitative analysis to the effort. Your assignment this week is to analyze current financial ratios for a given business. APA FORMATTING REQUIRED. 1. Think of a specific business you find interesting, i.e. Apple, UTC, Southwest Airlines, etc. 2. Search the web for the business' "Financial Statement". (You will find many hits for the data.) 3. Select the "http://www.morningstar.com/" site offering your company's financial statement. 4. You will now see a number of financial ratios for your company. Below is an example for Apple: http://financialsmorningatar.com/ratios/r.html?t=AAPL 5. Now, define the following ratios, note the ratio for your business, and explain what the ratio means for the business moving forward: a) Return on Assets b) Return on Equity c) Return on Equity d) Gross Margin e)SG&A Margin f) Current Ratio g) Quick Ratio h) Total Debt/Equity I) Total Revenue j) Gross Profit Here are some additional source as well. You can always do a quick search on Google using the appropriate keywords in your search. Apple (Return on Assets): https://ycharts.com/companies/AAPL/return on assets Https://ww.stock-analysis-on.net/NASDAQ/Company/Apple-Inc/Ratios/Profitability/Quarterly-Data#Ratios-Summary

Answer 1

The company of which we are going to do the analysis is Apple Inc.

The ratios are taken from morningstar.com for the year 2017.

1. Return on Assets - 13.87%

Return on assets is defined as the percentage of profit that a company earns in relation to its overall resources.

Apple's return on asset is nearly 14%. Over the span of 5 years, the return on assets have decreased this might be because the overall assets have increased over the years.

2. Return on Equity - 36.87%

Return on equity is defined as the percentage of profit that a company earns in relation to stock holders equity.

Apple has a high stock holders equity as 36.87%. It has remained constant over the past few years.

3. Gross Margin - 38.47%

Gross margin is defined as the total revenue minus the cost of goods sold. The higher the margin the more efficient the company. Apple has a good gross margin of 38.47%. The gross margin has remained constant for apple over the span of 5 years.

4. SG&A Margin - 26.76%

SG&A stands for Selling General and administrative expenses. It can also be expressed as operating margin.

Apple's SG&A margin has decreased by 2-3% over the span of 5 years. This might be due to more promotional expenses in the recent years.

5. Current ratio - 1.28

Current ratio is defined as current assets by current liabilities. It tells about the company's ability to pay short term debt and long term obligations.

Apple current ratio has been in the range of 1-1.5, which is good as it shows that it is able to pay its short term debts easily.