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 that 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://financials.morningstar.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 Capital

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 sources 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://www.stock-analysis-on.net/NASDAQ/Company/Apple-Inc/Ratios/Profitability/Quarterly-Data#Ratios-Summary

Answer 1

Apple Inc
		2017	2016	2015	2014	2013
Return on Assets		12.88%	14.20%	18.38%	17.04%	17.89%
Return on Equity		36.07%	35.62%	44.74%	35.42%	29.98%
Return on Capital		101.74%	114.24%	141.93%	108.84%	104.50%
Gross Margin		38.47%	39.08%	40.06%	38.59%	37.62%
SG&A Margin		17.31%	16.84%	15.30%	17.00%	16.84%
Current Ratio		1.28	1.35	1.11	1.08	1.68
Quick Ratio		1.09	1.22	0.89	0.82	1.4
Total Debt/Equity		0.86	0.68	0.54	0.32	0.14
Total Revenue		229234	215639	233715	182795	170910
Gross Profit		88186	84263	93626	70537	64304

	Ratio Analysis
	Ratio	Description	Analysis	Remarks
1	Return on Assets	A Profitability ratio calculated as net income divided by total assets	ROA decreased from 2015 to 2016 and from 2016 to 2017
2	Return on Equity	Net Income divided by Shareholders Equity	ROE Decreased form 2015 to 2016 and slightly improved from 2016 to 2017
3	Retrun on Capital	A measure of the periodic,after tax ,Cash on yield earned in the business	ROC decreased from 2015 to 2016 and also decreased from 2016 to 2017
4	Gross Margin	Percentage of revenue available to cover operating and other Expenditures	Gross Margin decreased from 2015 to 2016 and also decreased from 2016 to 2017
5	SG&A Margin	SG & A Expensesdivided by Gross Profit	Increased form 2015 to 2016 and also form 2016 to 2017	SG & A Margin shall be lower than the Gross Margin
6	Current Ratio	Current Assets divided by Current Liabilities	Increased from 2015 to 2016 but slightly decreased from 2016 to 2017
7	Quick Ratio	(Cash plus short term marketable securities plus receivables) divided by current liabilities	Increased from 2015 to 2016 and slightly decreased from 2016 to 2017
8	Total Debt/Equity	Total Debt divided by Equity	Increased fro, 2015 to 2016 and also from 2016 to 2017
9	Total Revenue	Total Sales revenue	Decreased from 2015 to 2016 but increased from 2016 to 2017
10	Gross Profit	Revenue minus Costs	Decreased from 2015 to 2016 and aincreased from 2016 to 2017