Question

Refer back to Apple Inc. as a technology company and assess the financial statements using the ratio tools Select at least one profitability, liquidity, solvency, and market valuation ratio and evaluate the results. Based on your findings, post an initial response to the following:

• What do the metrics tell you about the company’s performance? Support your answer by explaining the results from your assessment.
• If you were considering investing in the company, what other questions would you ask to gain further insight into the performance?

Answer 1

Apple Inc. Financial Analysis (for the period ended 30.09.2019)

Current Ratio	1.54
Debt-Equity Ratio	1.194
Net profit Ratio	21.24%
Return on Equity	61.06%
Asset Turnover	0.7686

The conclusions that can be evaluated from this report are:

1. The company has a satisfactory current ratio which safeguards its short-term liquidity position.
2. A debt-equity ratio of 1.2 states that the company is more reliant on borrowed fund rather than owners’ equity.
3. Net profit is satisfactory and has shown a slight improvement since last year.
4. Return on Equity is more than satisfactory and it points to the fact that investors would be happy with the company’s performance and the company cares for them.
5. An asset turnover is also adequately achieved and points to the fact that assets are efficiently utilized in revenue generation.

Overall, the company is worth investing in, and is likely to yield positive returns.

Some other questions to be asked before investing are:

1. The market capitalization of the company
2. Its position among its rivals in the industry
3. Pending regulations (if any) against the company can affect its market value and share price.
4. The past trends and performance on the stock exchange.