This project requires about 3 pages of content. In this project, you will assess the financial health of the business in question, using financial analysis tools in your textbook. Please make your work neat and show all computations. And I hope tomorrow n

What is the name of the business you are reporting on?

Apple Computer

Refer to your income statement, prepare a trend analysis of Sales and of Net Income (or Net Loss) for all the years reported. Also, state what page in your annual report has your income statement.

Sales (2015 Industry Avg Growth – 17.42%) Net Income (2015 Industry Avg Growth – 15.91%) 2014: 2014: 182,795/170,910 = 106.95% (6.95% growth) 39,510/37,037 = 106.67% (6.67% growth) 2015: 2015: 233,715/182,795 = 127.85% (27.85% growth) 53,394/39,510 = 135.14% (35.14% growth)

In your opinion, are the trends in Sales and Net Income good or bad? Please briefly explain your opinion.

The trend is very good! Both sales and net income appear to be growing steadily, and the rate of growth appears to be increasing each year as well. Comparing Apple’s growth to industry averages, the results are good as well. Apple’s growth rate of both sales and income exceeded the industry average that year considerably.

Refer to your income statement, prepare a profitability analysis., evaluating Profit Margin Ratio, Earnings per Share, and Return on Assets.

Profit Margin Ratio (2015 Industry Avg – 27.86%) Return on Assets (2015 Industry Avg 3.73%) 2013: 2015: 37,037/170,910 = 21.67% Average Assets = (290,479 + 231,839)/2 = 261,159 Return on Assets = 53,394/261,159 =20.45% 2014: 39,510/182,795 = 21.61%

2015:

53,394/233,715 = 22.84%

In your opinion, are the results of this profitability good or bad? Please briefly explain your opinion.

Apple’s profitability is good. Profit margin is steady and growing slightly, although their profit was slightly below industry average in the most recent year. The return on assets is significantly higher than Apple’s competitors (20.45% for Apple vs. 3.73% for the overall industry), indicating that Apple was much more effective at generating income from its assets than its average competitor. Finally, the earnings per share is steadily growing, indicating Apple is an attractive stock to own.

Refer to your income statement and balance sheet, and evaluate your company’s ability to sell merchandise. Be sure to evaluate Gross Profit and Inventory Ratios.

Inventory Turn Ratio (2015 Industry Avg 5.52) Days Sales in Inventory (2015 Industry Avg 66.08) 2015: 2015: Avg Inventory = (2,349 + 2,111)/2 = 2,230 Days’ Sales in Inventory = 365/62.82 = 5.81 days Inventory Turns = 140.089/2,230 =62.82

In your opinion, are the results of this merchandising analysis good or bad? Please briefly explain your opinion.

Apple’s ability to sell merchandise profitably is excellent. The industry average Gross Profit Percentage for 2015 was 27.86%, suggesting that Apple consistently outperforms their competitors in this area. In addition, the trend of this metric seems to be improving each year. In terms of ability to turn over inventory, Apple again outperforms their competition. Apple only holds onto inventory for an average of 5.81 days before it is sold, whereas their competitors take more than 66 days to sell inventory, on average. These suggest that Apple is a very successful merchandiser.

Refer to your balance sheet, and evaluate your company’s ability to pay its debts.

Debt to Asset Ratio (2015 Industry Avg 62.67%) Current Ratio (2015 Industry Avg 1.56) 2015: 2015:

$171,124/$290,479 = 58.9% $89,378/$80,610 = 1.11

2014: 2014:

$120,292/$231,839 = 51.9% $68,531/$63,448 = 1.08

In your opinion, are the results of your debt analysis good or bad? Please briefly explain your opinion.

Apple has slightly less debt than its average competitor, which means that less of Apple’s future income is dedicated to paying debts, a lower risk strategy. However, Apple seems to be less prepared to pay current liabilities with current assets than their competitors. Their current ratio is strong, but not as strong as their average competitor.

Refer to your income statement, and dividends paid.

In your opinion, does your company’s dividend history make the stock attractive to stockholders? Please briefly explain your opinion.

Apple does pay dividends, which is good for shareholders who prefer to receive a share of annual earnings via dividend. However, the dividend payout seems to be declining, which may make the stock less attractive to those investors. Apple may be retaining more earnings to fund growth, which is common in technology companies. In this case, investor returns may come from rising stock prices more than dividend payouts. So, the attractiveness of the stock will depend on investors’ goals.