Staying Power Ratios
These ratios are current and debt to equity ratio. In all three years, the current ratio for Apple shows that the corporation operates above the industry’s actual standards. Operating above the standards is advantageous since the company can gain an effect and stable competitive edge its opponents. Besides, the company can run and cater to its daily financial obligations without experiencing any difficulty. In all the three financial years, the current ratio average was 1.32. for the financial year, 2019 was slightly higher than the previous years.2018; the ratio was 1.13, while 2017 was 1.28. 2019 was the most stable year, while 2018 had compromised stability.
The debt ratio has been increasing progressively over the years; this signifies that Apple has been growing debt finance over the years, and equity finance has reduced. The use of treasury bonds has caused the rate according to its financial statements. High debt to equity ratio subjects a firm to possible debt risks, especially the hard times a company can run bankruptcy since it cannot settle its debts. Over the years, Apple has been increasing its leverage ratios, which is risky.
Earning Power
The earning ratios over the years have been slightly steady with minimal fluctuation. All the ratios are above the average of the industry. That signifies that the company has a relatively significant share in the market. A big percentage translates to measurable profits over the years; the years’ gross margin has been 38.6%, 38.3%, and 37.8% for the years 2017, 2018, and 2019 respectively. At the same time, the operating profit margin is quite commendable since the average 13.3%. The average for the net sales is 21.3% signifying the companies net income is stable over the years.
Overall Efficiency Ratios
The cash flows have relatively good over the years; however, there was a decline in 2019 to 126%. The efficiency ratios depict that the firm’s management is efficient, and its efficiency is above industry standards, especially for the return on assets. ROA has increased from 12.9% to 16.3, where it has stabilized. This means that the shareholder’s wealth is maximizing steadily. Return on equity has been rising from 36.1%, 55.6%, and 61.1% over the years; this is also favorable to shareholders since Apple can generate relatively good profits. This also means that most stock analysts recommend Apple inc stocks to be bought since they appreciate it over the years.
Working Capital Cycle Ratios
Apple company is at the average desired standards on its efficiency to manage working capital ratios. Inventory turn days for Apple are average 9.92; hence, the period is short to enable proper inventory conversion. The firm shows efficiency in debt collection, which is averagely at 5.84. besides, they can settle their debts within four days. Finally, the average payment period is relatively stable.