Financial Health
Knowledge of financial ratios is paramount to the users and the company as a whole. For instance, financial ratios can be used by investors in determining whether investing in stocks of that company will give him/her return on the investments. Additionally, rates enable the management strategize on how to achieve a healthy financial future. Ratios provide a precise interpretation to the users in a manner in which other financial statements are unable to provide. They provide an insight to the users on matters concerning decision making of the company. Further, financial help the company’s management of understanding different sectors that they are supposed to check. This paper will provide the analysis of the financial health of Apple Inc. and Blackberry Limited Company. The two firms are both global players who have been working so as to maintain their financial status and continue dominating the markets as a result of their products.
Apple Company has registered a tremendous growth over the recent years due to the unique products that they are innovating and selling them at reasonable prices. In 2012 and 2013 the current ratio of Apple Inc. had been deteriorating but currently it is showing signs of improvement. This ratio shows the ratio between the current assets and the current liabilities. It determines whether a company can clear off its liability with the assets at hand. As for Apple, since the ratio is positive, it signifies that the company’s financial situation currently has improved. Besides, it is clear to the management that the company has a brighter financial future since it is capable of paying off its debts using the current assets available. As for the Blackberry limited, the current ratio is a bit lower than the one for Apple Company. It signifies that Apple Company has more current assets than the Blackberry Company. Additionally, the Quick Ratio of Apple Inc. has recorded a huge improvement over the current years. It symbolizes that the company has been improving its profitability and a very high rate than before. On the other hand, Blackberry Company has Quick ratio that is lower which symbolizes that it is yet to have a firm assets column that will ensure its financial stability in the near future (Milne, 2015).
Inventory turnover has also recorded increase in comparison to the previous years in Apple Incl. This has been contributed to the increase in technological advancement. Additionally, innovativeness has made the company to dominate the market with unique products that are being improved on a daily basis. This ratio is calculated by taking the cost of goods sold divided by the average inventory. There is cost reduction due to the new technology that has made the cost of production to be low. Blackberry, on the other hand, has been struggling to maintain the dominance of the market it had before. However, things are not working perfectly well although they have been improving over the recent years. On the receivable turnover, Apple has been in the lead due to that the sales that it is making globally. From the report, it was revealed that the strategies that had had been set previous years had been implemented and were working quite well-showing an increase in the sales and the larger capital base of the company. Blackberry has been affected by the current changing economic situation. In addition, there has been restructuring that has been undergoing in management and the strategic team. This move has affected the productivity of the company hence showing slightly lower receivable turnover as compared to previous years (O'Grady, 2014).
Apple has differentiated its products from its competitors therefore increasing the market share. Day sales outstanding are small showing that its clients are taking a short time to clear their debts. On the contrary, Blackberry has been experiencing high Day sales outstanding revealing how the clients have been unable to clear their debts in time. Total and fixed asset turn over reveal the ability of the net sales to cover for fixed and total sales respectively. For both companies, they have improved by the Apple company has been in the lead due to the expansion that the company has been undertaking in China and other branches globally. Blackberry’s pace of opening other branches in regions that have a low cost of labor has been low. Gross profit margin is used to show the percentage of revenues that can be used to cover the expenses such as the ones for operation. Apple has shown some improvement over the past one year in the gross profit margin that had been deteriorating. Blackberry is still struggling with its financial situation, but it is expected to change by the next quarter of their financial year if the strategies they had set are implemented. Return on Assets and Return on Equity has also improved for both companies over the first quarter of their financial calendar.
From the reports, it is observable that Apple Inc. has performance that is above average. This is also revealed by the prices of its shares in the stock market. Currently, a share from Apple Inc. is going for $ 129.67 while for Blackberry are trading at $ 10.27. In addition, the Earning Per share of Apples Stocks is 7.9 which is higher compared to Blackberry’s which has been deteriorating and recorded a loss of 0.58 from this data, it is clear that the financial health of Apple is good and promising compared to the one for Blackberry. However, with the strategic plans that have been set might slightly improve the financial situation of Blackberry (Tamari, 2014).
References
Milne, A. A., & Walt Disney Company. (2015). Blackberry Annual Financial Report. .Place of publication not identified: Mouse works.
O'Grady, J. D. (2015). Apple Inc. Annual Financial Report. Westport, Conn: Greenwood Press.
Tamari, M. (2014). Financial ratios: Analysis and prediction. London: P. El