Question

Company Name (From Part 1): Apple Inc. ******************************************************************************** ******************************************************************************** 3. RATIO ANALYSIS Using the annual report you chose in Part 1, calculate the following ratios by showing your work and then discussing their meaning. Make sure to use the industry averages or prior years for comparison purposes only. Do not use the ratios from Reuters' or some other site as your ratios. At a minimum, your analysis should address: Do we want these ratios to be high or low? How do they compare to industry averages or year to year? Is this company's ratios good or bad? a. Liquidity and Efficiency: Complete the following table to help you gather your information. Date Table Most Current Year Amount Previous Year Amount or Industry Average Page # Current Assets: Current Liabilities: Cash Provided by Operations From the cash flow statement Calculate the fowling: Make sure to show your work. 1. Working capital: Current Assets – Current Liabilities = 2. Current ratio: current assets / current liabilities = 3. Acid test (quick ratio): Cash + Receivables/Current Liabilities= 4. Accounts Receivable Turnover: Sales/ Accounts receivable = 5. Inventory Turnover: cost of goods sold/Inventory = 6. Total Asset Turnover: Sales/Total assets = Analysis_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ b. Solvency: Complete the following table to help you gather your information. Date Table Most Current Year Amount Previous Year Amount Page # Total Assets: Total Liabilities: Cash Provided by Operations: Make sure to show your work. 1. Debt Ratio: Total Debt/Total Assets 2. Equity ratio: Long Term Debt + Lease Obligations/ Total Equity 3. Times Interest Earned: Operating Income/Interest Expense Analysis:___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ c. Profitability: Complete the following table to help you gather your information. Date Table Most Current Year Amount Previous Year Amount Page # Net Income: Net Sales: Total Assets: Preferred Stock Dividends: Common Stockholder's Equity: Make sure to show your work. 1. Profit margin ratio: Net income/ Net Sales 2. Return on assets ratio: Net income/ Average Total Assets 3. Return on common stockholders’ equity ratio: Net income – Preferred dividend/Average common stockholders’s equity Analysis:_________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Answer 1

Company Name (From Part 1): Apple Inc. ******************************************************************************** ******************************************************************************** 3. RATIO ANALYSIS Using the annual report you chose in Part 1, calculate the following ratios by showing your work and then discussing their meaning. Make sure to use the industry averages or prior years for comparison purposes only. Do not use the ratios from Reuters' or some other site as your ratios. At a minimum, your analysis should address: Do we want these ratios to be high or low? How do they compare to industry averages or year to year? Is this company's ratios good or bad? a. Liquidity and Efficiency: Complete the following table to help you gather your information. Date Table Most Current Year Amount Previous Year Amount or Industry Average Page # Current Assets: Current Liabilities: Cash Provided by Operations From the cash flow statement Calculate the fowling: Make sure to show your work. 1. Working capital: Current Assets – Current Liabilities = 2. Current ratio: current assets / current liabilities = 3. Acid test (quick ratio): Cash + Receivables/Current Liabilities= 4. Accounts Receivable Turnover: Sales/ Accounts receivable = 5. Inventory Turnover: cost of goods sold/Inventory = 6. Total Asset Turnover: Sales/Total assets = Analysis:Working Capital shows the difference between current assets & current liability. Current ratio measures the current assets against current liabilities. its shows that company can pay the short term liability by luiqidating its current assets. Current ratio is better Two times. Quick Ratio is liquidity ratio thats is more important than the current ratio quick ratio is = 1 is better for business. Inventory turnover ratio means COGS/Avg Inventory. high inventory turnover ratio than the business show that inventory sold at faster rate. and account receaivale ratio show thats how quick compnay collect its outstansding bills from customer.high receivable turnover ratio is better for business. Assets Turnover ratio shows that how efficiently compnay use its assets to generate revenue. High assets turnover ratio is better for genrating quick revenue.

_____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ b. Solvency: Complete the following table to help you gather your information. Date Table Most Current Year Amount Previous Year Amount Page # Total Assets: Total Liabilities: Cash Provided by Operations: Make sure to show your work. 1. Debt Ratio: Total Debt/Total Assets 2. Equity ratio: Long Term Debt + Lease Obligations/ Total Equity 3. Times Interest Earned: Operating Income/Interest Expense

Analysis:_Solvancy Ratio measures the company ability to pays its long term liability. its show the company strenght of adeqaute cash flow to pay its intrets liability. Total debt ratio/ assets ratio shows the company total assets finance by the debt. low debt assets ratio show thats company has low financial leverage has low risk in business.

Equity ratio is similar to debt assets ratio measuring the amount of total capital ( equity + liability) its shows that earing of the company destributed in fewer investors

Interest coverage ratio shows that company how much cash generated to as compare to interest expneses.

__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ c. Profitability: Complete the following table to help you gather your information. Date Table Most Current Year Amount Previous Year Amount Page # Net Income: Net Sales: Total Assets: Preferred Stock Dividends: Common Stockholder's Equity: Make sure to show your work. 1. Profit margin ratio: Net income/ Net Sales 2. Return on assets ratio: Net income/ Average Total Assets 3. Return on common stockholders’ equity ratio: Net income – Preferred dividend/Average common stockholders’s equity

Analysis:_Profit margin ratio net income / net sales shows the net income of comapny over its net revenue its show the transformation of companys sales into income for its share holders

Return on assets ratio shows thats efficient utilization of fixed assets to earns net income. high ratio shows thats company efficiently generating the income by using its assets

return on equity measures net income less preferred dividends against total stockholder’s equity . this ratio measures the income distributed to share holder against their investment

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