Apple ratios discussions

Apple ratios
Based on the ratios, please explain the missing ratios, and based on the analysis, expand the conclusion and add more illustrations.

 

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Ratios: 

Apple Nokia Motorola  BlackBerry Limited Sony Mobile Industry Average 
Ratios Company Industry
Current Ratio 1.47 1.77 1.5 1.17 1.15 0.93 1.244
Quick Ratio 1.43 1.68 1.26 1.05 0.84 1.145
LT Debt to Equity 130.98% 46.96% 38.78% 0% 15.1% 61.62%
Total Debt to Equity 156.85% 53.27% 45.23% 31.87% 38.33% 68.07%
Asset Turnover 0.86 0.74 0.58 0.75 0.29 0.37 .57
Inventory Turnover 46.17 43.48 4.37 8.85 9.4 17.1975
P/E Ratio 34.4 15.31 29.81 33.42 14.71 28.085
Gross Margin 38.19% 44.36% 37.47% 49.46% 74.46% 27.43% 45.402%
Operating Margin 24.52% 23.12% 5.13% 19.23% -72.68% 10.15% -2.636%
Net Profit Margin 21.33% 17.01% 2.81% 11.06% -72.19% 8.47% -5.704%
Revenue/ Share 15.44 32.7 4.73 43.6 1.82 62.44 25.606
Book Value/ Share 4.22 20.17 3.19 -4.89 3.44 33.46 7.884
Cash/ Share 5.43 9.12 1.61 7.89 1.61 27.46 8.8

Sources: Apple (AAPL) Financial Ratios

 

  1. Quantitative Analysis:

Current Ratio

Apple’s current ratio is 1.47, which is slightly below the industry average of 1.77. The current ratio is the liquidity ratio that measures the company’s ability to pay short-term payments in one year or less. Apple currents has 1.47 times more current assets than current liabilities. The current ratio can also be referred to as $1.47 current assets that Apple has. Compared to its competitors, Apple has a higher current ratio, which is a positive.

 

Quick Ratio

Apple’s quick ratio is 1.43, which is slightly below the industry average of 1.68. The companies compared to Apple, have a very low quick ratio. The quick ratio explains the company’s short-term liquidity and how the company will meet the short-term requirements. The quick ratio shows how quick the company can convert their assets to cash, to pay for the current liabilities.

 

Long Term Debt to Equity 

Apple’s long-term debt to equity is 130.98% which is relatively high compared to the industry average. To calculate the long-term debt to equity ratio, take the company’s long term debt and divide it by the book value of common equity. Companies, like Apple, that have a higher ratio, tend to be riskier.

 

Total Debt to Equity

Apple’s total debt to equity is 156.85% which is relatively high compared to Apple’s competitors. Apple’s debt to equity is over 100% larger than the industry average. Looking at the balance sheet, the total liabilities are divided by the shareholder’s equity. This percentage shows how Apple is financing through their debt.

 

Asset Turnover

Inventory Turnover

P/E Ratio

 

  1. Qualitative Analysis:

Apple is today considered to be one of the most successful companies on the planet. Steve Jobs founded the company, and since it was founded, it has been a leading producer of cutting-edge technology. The company has its most successful product as the  iPhone, which accounts for over half its revenue. Apple produces computers, laptops, smartwatches, and other electronic devices as well. Today, financial analysts value the company at over 1.2 trillion dollars. Apple is in an industry with stiff competition, and therefore they have to ensure their products have top-notch quality before getting them to market. Some of the competitors include good technology companies like Samsung and Huawei. In recent times, they have surpassed Apple to be the leading producers and sellers of smartphones in the world (Clarke and Boersma, 2018). Even so, Apple has maintained its competitive advantage by providing its users with high-quality gadgets with prestige.

 

Apple has gained some strengths over time to help it get where it is today. First, Apple has the most valuable brand of all brands. This aids them in marketing and business strategies as they always have loyal consumers to the brand. The brand of apple is also globally known and iconic. The company is leading in top technology as they were first to bring about some unique technological devices like the iPad. To date, the company is motivated to be the first to produce better technology than ever. Apple is the brand of choice for many consumers on the market. Apple also conducts in-depth research of their consumers so that their gadgets may seem personalized with a design, craft, and technological solutions. In recent times, Apple has also implemented sustainability solutions that allow for reusing parts of the iPhone and other gadgets. The company also expands its products and services portfolio each day, with an opportunity to expand it further. For instance, Apple is looking to expand its services portfolio, which already accounts for 17% of its revenue.

 

Even as Apple has a strong brand name with a loyal consumer base, it still suffers some weaknesses. Apple is said to have the highest-priced products as compared to other products in the same market. Financial analysts confirm this as most of their electronic devices are sold at a higher price compared to devices from other companies. This could explain why other companies may surpass it as leading producers of smartphones. The devices are considered a luxury as low-income consumers can hardly afford them. Apple is also not very keen to market its products with advertisements and promotions as they feel they have established loyal consumers already (Danko et al., 2019). Other brands in the industry have massive budgets for advertising and marketing. The leap of apple to provide other services and products might be considered to be a weakness by many financial scholars. This is because the company is trying to get into an area they are not familiar with, like streaming of games, video streaming services, and credit cards.

 

  1. Conclusion

As earlier stated, the competition faced by Apple is tough; therefore, the company has to maintain a quality line of products if they want to keep their consumers and stock price. Even so, the stock price of the company has been solid for the past financial year, and financial analysts believe it as a safe stock for investment. As of June 2020, the stock of Apple was trading slightly over 300 dollars, which makes an increase of about 25% since the start of the quarter (Li, 2020).

 

 

 

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