Financial Analysis Report of Apple Inc.

Company description:
Apple Computers Inc. was established on April 1, 1976,in a carport by Steve Occupations and Steve Wozniak
who were college drop-outs. Apple Inc. was consolidated on January 3, 1977, as
a plan, manufacture and market versatile communication and media gadget, individual computers,
and versatile computerized music player. The company too offers a assortment of related computer
program, administrations, peripherals, organizing arrangements, and third-party advanced content and
applications. Apple is popular for its famous cellular items. A few of
these products and administrations include iPhone, iPad, Mac, iPod, and Apple TV. It moreover produces a portfolio
of customer and proficient computer program applications, the iOS and OS X operating frameworks, iCloud, and
a assortment of accessory, service and back offerings. Now the company offers its items around the world through
retail stores, online stores, coordinate deals drive, third party wholesalers and affiliates.

Financial Analysis:
Apple's financial analysis was conducted using the financial indicators of 2020 and 2019. The company's
financial statements for the two years and its analytics are listed on the Report page. A number of sources were
used in the preparation of Apple's report on financial analytics. You can get acquainted with the above on the
following pages.
Apple Inc.
ANALYSIS OF FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS - USD ($) in Millions
Current assets:
Cash and cash equivalents
Marketable securities
Accounts receivable, net
Inventories
Vendor non-trade receivables
Other current assets
Total current assets
Non-current assets:
Marketable securities
Property, plant and equipment, net
Other non-current assets
Total non-current assets
Total assets
Current liabilities:
Accounts payable
Other current liabilities
Deferred revenue
Commercial paper
Term debt
Total current liabilities
Non-current liabilities:
Term debt
Other non-current liabilities
Total non-current liabilities
Total liabilities
Commitments and contingencies
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares
authorized; 16,976,763 and 17,772,945 shares issued and outstanding, respectively
Retained earnings
Accumulated other comprehensive income/(loss)
Total shareholders’ equity
Total liabilities and shareholders’ equity

CONSOLIDATED STATEMENTS OF PROFIT & LOSS - USD ($) in Millions

Net sales
Cost of sales
Gross Profit
Operating expenses:
Research and development
Selling, general and administrative
Total operating expenses
EBIT
Non-Operating Interest Income
Interest Expense
Pretax Income
Provision for income taxes
Net income

FINANCIAL RATIO ANALYSIS

Efficiency Ratios
Inventory Turnover
Inventory Turnover Period
Accounts Receivable Turnover
Receivable Collection Period
Accounts Payable Turnover
Payable Outstanding Period
Cash Conversion Cycle
Asset Turnover Ratio
Analysis in Efficiency Ratios:
Efficiency ratios are utilized to measure how beneficial a company's resources are.

The inventory turnover ratio measures the number of times stock "turned over" or how many days it takes to se
Apple Company's financial statements, the inventory turnover ratio in 2020 increased compared to 2019.
A high ratio demonstrates stock is selling rapidly which small unused inventory is being put
away (or might too cruel stock deficiency). However, inventory turnover period ratio remained same as in two ye
the ratio, it seems that the company sell its inventory in 9 days.

Accounts Receivable Turnover ratio measures the number of times accounts receivables turned over during the
the turnover of receivables, the shorter the time between making sales and collecting cash. Concurring to the sa
ratio, receivables turned over nearly 14 times in 2020 than 11 times in 2019. This means that the time between m
collecting cash decreased by 6 days during the 2020 years. Moreover, it could be a measure at as it were one po
not take into consideration seasonal changes.

Accounts Payable Turnover define the number of times trade payables turn over during the year. The higher the
shorter the period between purchases and payment. According to the report, the ratio increased slightly in 2020
Which means that, the company may altered its payment terms with suppliers. Moreever, there may be cash flo
that it seems in the payable outsdanding period ratio.

Cash conversion cycle measures the time period required to change over resources into cash. The ratio depends
factors: average inventory turnover period, average receivable collection period and payable outstanding period
analytical report, the increase in this ratio in 2020 compared to 2019 will help the company to invest more mone
to the ratio, we can say that there is a sharp administration in managing the inventory of the company.
Asset Turnover Ratio determines that how productively your business produces sales on each dollar of assets. Co
there was an increase in sales of 14,341 million in 2020. This means that the company's management has led to
by using a small investment in assets. As a result, due to that the asset turnover ratio increased in 2020 compare

Financial Strength ratios

Current Ratio
Quick Ratio
Debt Ratio
Times-Interest-Earned Ratio
Analysis in Financial Strength Ratios:

Current proportion measures your capacity to meet short term commitments with short term resources, a valua
cash flow within the near future. A very high current ratio may mean there is excess cash that should possibly be
in the business or that there is too much inventory. However, according to the report there is a bit reduction in 2
decline in this ratio is associated with a decrease in current assets. The decline in this ratio means a reduced abil
As we can see in the balance statement, cash and cash equivalents - the great portion of total assets decreased b
usd in 2020.

Quick ratio is a more rigid liquidity test that demonstrates if a firm has sufficient short-term resources (without s
cover its prompt liabilities. It is the best indicator for a company, that the quick ratio is higher than 1, but compa
is also a reduction in the ratio in 2020. The lower the ratio in 2020 than in 2019, the more likely the company str
debts.

The debt ratio measures the relative sum of a company’s assets that are given from obligation. During the 2019 y
of assets are financed with debt, also the percentage increased in 2020 year and the business is using more debt
equity financing to operate the company.

Times-Interest-Earned Ratio measures the company's capacity that how many times over a firm can pay the inte
The times interest earned ratio for this firm for 2019 is 17,88 and for 2020, the ratio is 23,07. The ratio is better i
2019. This is because the debt to assets ratio increased in 2020.

Profitability Ratios
Gross Profit margin
Operating Profit margin
Net Profit Margin
Return on Total Assets
Return on Equity
Analysis in Profitability Ratios:
Apple's gross profit margin remained as the same percentage and as a result of calculation it was 38 %. This implies that fo
created in sales, the company produced 38 cents in gross profit before other business expenses were paid. A higher ratio i
as this would show that the company is selling inventory for a better profit. Gross profit margin provides a common sign of
profitability, but it isn't a exact estimation.

Operating Profit Margin is a profitability ratio that reflects the percentage of profit a company produces from its operation
taxes and interest charges. It is calculated by dividing the operating profit by total revenue and expressing as a percentage
operating profit margin is usually seen as a superior indicator of the strength of a company’s management team, as compa
profit margin. According to the income statement, Research and Development expenses increased by 2535 millions, Sellin
administrative increased by 1671 millions in 2020 than in 2019. Due to the growth rate was caused by declining operating
Apple.
This ratio measures company's capacity to cover all operating costs counting indirect costs and is the proportion of net pro
company. Apple's net profit margin for two years was 21%. A 21% net profit margin shows that for each dollar produced b
company kept 0.21 dollar as profit. A better profit margin is continuously alluring since it implies the company creates mor
sales.

Return on Total Assets Measures company's ability to turn assets into profit. According to the analysis of the ratio, the incr
assets in 2020 reflects the increased sales, reduced costs, much higher net income and decreased total assets for that year
ROA percentage is the better, because it indicates a company is good at converting its investments into profits.

Return on Equity defines the rate of return on investment by shareholders and it is one the most significant ratio
ratio tells the business owner and the investors how much income per dollar of their investment the business is
that Apple Company generated $0.74 of profit for every $1 of total equity in 2020, giving the company an ROE of
the report, one reason for the increased return on equity was the increase in net income. When analyzing the re
80% of assets are financed using debt and 20% of assets are financed using equity.
 12 Months Ended
Sep. 26, 2020 Sep. 28, 2019

38,016 48,844
52,927 51,713
16,120 22,926
4,061 4,106
21,325 22,878
11,264 12,352
143,713 162,819

100,887 105,341
36,766 37,378
42,522 32,978
180,175 175,697
323,888 338,516

42,296 46,236
42,684 37,720
6,643 5,522
4,996 5,980
8,773 10,260
105,392 105,718

98,667 91,807
54,490 50,503
153,157 142,310
258,549 248,028

50,779 45,174

14,966 45,898
- 406 - 584
65,339 90,488
323,888 338,516

274,515 260,174
169,559 161,782
104,956 98,392

18,752 16,217
19,916 18,245
 38,668 34,462
66,288 63,930
3,676 5,383
2,873 3,576
67,091 65,737
9,680 10,481
57,411 55,256

41.52 39.40
9 9
14.06 11.35
26 32
3.83 3.50
94 103
-60 -62
0.83 0.77

how many days it takes to sell inventory. Using

sed compared to 2019.
eing put
tio remained same as in two years. According to

ables turned over during the period.The higher

ting cash. Concurring to the sales to receivables
means that the time between making sales and
measure at as it were one point in time and does

uring the year. The higher the turnover, the

atio increased slightly in 2020 than in 2019.
reever, there may be cash flow problems in 2019

s into cash. The ratio depends on the following

d payable outstanding period. According to the
company to invest more money in less days. Due
ory of the company.
 es on each dollar of assets. Compared to 2019,
any's management has led to an increase in sales
tio increased in 2020 compared to 2019.

1.36 1.54
1.33 1.50
80% 73%
23.07 17.88
os:

short term resources, a valuable indicator of

s cash that should possibly be invested elsewhere
ort there is a bit reduction in 2020 than in 2019. A
his ratio means a reduced ability to generate cash.
on of total assets decreased by 10828 millions

ort-term resources (without selling inventory) to

o is higher than 1, but comparing two years there
e more likely the company struggled with paying

m obligation. During the 2019 year, 73 percentage

e business is using more debt financing than

es over a firm can pay the interest that it owes.

o is 23,07. The ratio is better in 2020 than in

38% 38%
24% 25%
21% 21%
17% 16%
74% 61%

n it was 38 %. This implies that for each dollar Apple

enses were paid. A higher ratio is ordinarily favored,
argin provides a common sign of a company's

any produces from its operations, prior to subtracting

e and expressing as a percentage. A company’s
y’s management team, as compared to gross or net
ncreased by 2535 millions, Selling, general and
s caused by declining operating profit margin in
 and is the proportion of net profits to revenues for a
that for each dollar produced by Apple in sales, the
mplies the company creates more profits from its

the analysis of the ratio, the increased return on

creased total assets for that year. The higher of the
estments into profits.

one the most significant ratios to investors. This

eir investment the business is earning. This means
giving the company an ROE of 74%. Referring to
ncome. When analyzing the return on equity ratio,
 Sources:
1 2019 and 2020 Balance and Income Statement of Apple Inc. Link
2 Company description Link
3 Financial Ratios Book
https://www.sec.gov/cgi-bin/viewer?action=view&cik=320193&accession_number=0000320193-20-000096&xbrl_type=v
https://en.wikipedia.org/wiki/Apple_Inc.
Financial Accounting_Walter T. Harrison Jr.