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Financial Statement Interpretation and Wrap up

Managerial Accounting

BUS 5110: MANAGERIAL ACCOUNTING

Discussion Forum Unit-8

Financial Statement Interpretation and Wrap up

Last week, you performed a trend analysis for the manufacturing company you selected in week 2. For this week,
please refer back to that company and assess the financial statements using the ratio tools you have acquired in the
course. 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?

Date: 19–25 March, 2020

Masters of Business Administration (MBA)

Faculty of Business Studies

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Financial Statement Interpretation and Wrap up
Managerial Accounting
The company's profitableness:

Apple has health come back on equity rate i.e. it's providing a decent 61% come back on the

investments created by investors within the company. Having a 61% ROE that is quite their

previous ROE of 55% is commendable and can positively increase the goodwill of the corporate.

The company's liquidity:

A perfect current magnitude relation is 2:1. Apple is getting ready to maintain that figure as

presently they're having a 1.54:1 magnitude relation that beyond their last year's magnitude

relation. A healthy current magnitude relation signifies that Apple is in a position to pay

off its short-term liabilities with its current assets.

Company's economic condition:

Apple has a perfect debt to equity, magnitude relation i.e. 1.014: 1. A 1: 1 debt

to equity, magnitude relation tells that a corporation has an equal quantity of borrowed funds also

as owner's fund that reduces the danger of additional money debt within the company. Apple

should still maintain this magnitude relation.

The company's market valuation: EPS tells what proportion come back one share of the

corporate is earnings. Having a $12,000EPS (approx.) tells that for every share outstanding the

corporate is paying its homeowners a hefty quantity of $12,000.

Overall, the corporate is doing fine within the market. The prevailing investors should be pleased

with the performance of the corporate, and also to come back on their investment. For a
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Financial Statement Interpretation and Wrap up
Managerial Accounting
replacement capitalist, it's not the proper to speculate in Apple because of the worth of share

should be skyrocketing at the instant thanks to such a superb number shown within the money

statements by the corporate. however, Apple is taken into account to be an extended term invest

which might keep you weak throughout your investment period. Therefore, a rational capitalist

should look forward to the costs of Apple's stock to come back down then invest it in.

Some of the opposite queries that i would raise if I had to speculate in Apple: -

1. what's company's gift worth of its expected future money flows?

2. What square measure company's activity ratios?

3. what's company's historical trend?

Explanation:

Ratio analysis of Apple INC. as on twenty ninth Sept 2018 ( all figures square measure in

thousands ) :-

Profitability magnitude relation

Return on equity = earnings / Shareholder's equity

= $59,531 / $107,147

= 0.55 or 55%

Liquidity magnitude relation

Current magnitude relation = Current assets / Current liability

= $131,339 / $116,866

= 1.12
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Financial Statement Interpretation and Wrap up
Managerial Accounting
Solvency magnitude relation

Debt to equity magnitude relation = Debt / Equity

= $93,735 / $107,417

= 0.87

Market valuation magnitude relation

Earnings per share = earnings / range of shares outstanding

= $55,256 / 4955.377

= $11.51

Ratio analysis of Apple INC. as on twenty ninth Sept 2019 ( all figures square measure in

thousands ) :-

Profitability magnitude relation

Return on equity = earnings / Shareholder's equity

= $55,256 / $90,488

= 0.61 or 61%

Liquidity magnitude relation

Current magnitude relation = Current assets / Current liability

= $162,819 / $105,718

= 1.54
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Financial Statement Interpretation and Wrap up
Managerial Accounting
Solvency magnitude relation

Debt to equity magnitude relation = Debt / Equity

= $91,807 / $90,488

= 1.014

Market valuation magnitude relation

Earnings per share = earnings / range of shares outstanding

= $59,531 / 4955.377

= $12.01

References

https://finance.yahoo.com/quote/AAPL/financials?p=AAPL