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Apple Financial Statement

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Apple Financial Statement

Apple leads the company in the innovation of the iPhone, iPad, Mac, Apple Watch, iOS,

OS X, watch OS and more (University of Phoenix, 2015). Apple is committed to providing the

best user experience to its customers through innovation hardware, software and service. There

are many tools that are used in the financial statement to perform a comparative analysis of the

company. The financial ratio of this company is used to examine the company’s profitability,

competence, and liquidity. According to University of Phoenix Apple Inc. form 10K (2015), the

annual financial report for period ending 9/26/2015 shows that the company paid $11.4 billion

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dollars in dividends in 2015. The price-earnings ratio is used to show that Apple is paying out

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dividends to their stockholders. Apple’s goal is to increase their dividend on an annual basis,

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subject to the approval of the Board of Directors (University of Phoenix, 2015). Apple net sales
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have increased from the period of to 2013 t0 2015 from 53 percent to 66 percent and increase of

12 percent. Apple’s annual report clearly indicates the success of the company over the past five
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years.
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Types and Tools of Comparative Analysis

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When it is time for a company to evaluate their financial status, there are many different

types and tools used for comparative analysis. There are also several ratios a company will
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utilize to evaluate financial statements. The types and tools used for comparative analysis help
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get an overall picture of how well the company is performing, and also serve as a tool to identify

areas that could use improvement. According to "Accounting Tools" (2016), “Horizontal analysis
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is the comparison of financial information over a series of reporting periods, while vertical

analysis is the proportional analysis of a financial statement, where each line item on a financial

statement is listed as a percentage of another item”. The types and tools that a company may

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utilize include working capital, current ratio, acid test ratio, accounts receivable, average

collection period, inventory turnover, average sale period, operating cycle, total asset turnover,

times interest earned, debt-to-equity ratio, equity multiplier, gross margin percentage, net profit

margin percentage, return on total assets, return on equity, earnings per share, price-earnings

ratio, dividend payout ratio, dividend yield ratio, and book value per share (Garrison, Noreen, &

Brewer, 2016).

Each one of the tools are unique in their own way, for example the price-earnings ratio is

the market price per share divided by the earnings per share. The price-earnings ratio is used to

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show whether a company is paying out the interest in dividends, or if the company is using the

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interest to reinvest internally to the organization. The net profit margin is the net income divided

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by sales. The net profit margin ratio is used when evaluating financial statements to measure the
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company’s profitability. The current ratio is the current assets divided by the current liabilities.

The current ratio is a ratio that would be utilized during a financial analysis of the company’s
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ability to repay debts in the short term (Garrison, Noreen, & Brewer, 2016). It is very important
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to have accurate reporting at all times. Inaccurately reported figures will produce ratios that are

not accurate, and will not provide an outlook that would otherwise be feasible.
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Ratios
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Financial ratios are statistics utilized to examine an entities financial operation. Financial
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ratios are utilized by banks, creditors, stockholders and bookkeepers to calculate data presented

on an entities financial statement. Results are based on Apple’s evaluations, bank investors and
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creditors who choose to lengthen or recant financing and potential stockholders may regulate the

level of commitment for Apple (Miah & Baca, 2014). Financial ratios are central tools that

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evaluate their profitability, competence, liquidity and creditworthiness of an entity. Ratios used in

Apple’s financial statement are invaluable implements used for making an investment decisions

such as how much gain will be made over a certain period of time. The statements were based on

three years to determine how much investments will be obtained for shareholders and other

investors. Even so, various new investors would prefer to leave their findings to fortune than try

to allocate with the pressure of financial ratios (Cortez, Ikram, Nguyen, & Pravini, 2015).

Apple’s ratios utilized are for the company to compose informed decisions about an

investment of their products and other tangible assets. The operating activity obtained is

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$81,266,000,000.00 which is good for their most recent year end totals. Ratios are appraisal

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points for companies. They can be utilized to evaluate stock in an industry that sales products in

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several countries other than the United States. Likewise, they can be utilized to determine a
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company today against its chronological quantities. It's important for a company to remember,
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however, that when utilizing ratios to formulate analyses, the evaluations must make sense for
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CPA firms to understand financial statements during audits (Miah & Baca, 2014).

Comparative Analysis and Ratio Analysis

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According to the SEC or U.S. Securities and Exchange Commission, “an annual report is

a document used by many public companies to disclose corporate information to its

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shareholders”. Included in that report is an opening from the CEO, there is a plethora of
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financial data, results of the operations, new product plans, market segment information,

sometimes research and development activities on programs, as well as subsidiary activities. The
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companies have to send the annual reports to their shareholders to elect certain positions at the

annual meetings. The companies are also required to post their proxy materials, including the

annual report on the companies’ website. It is filed with the SEC and contains detailed

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information on the business’s financial status and includes the annual financial statements of the

enterprise (Fast Answers, 2016).

Apple’s annual report is full of information. Information from financial statements

gathered by examining the relationships between items in the statements and the identification of

the trends in the relationships. These relationships are mostly expressed in numerical ratios and

percentages while the patterns identified through comparative analysis.

Liquidity ratios are used to analyze the liquidity and capital resources of the Apple

Company to determine the company's ability to meet its current debts and in evaluating its

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financial position. These ratios looked at the cash equivalents and marketable securities,

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property, plant and equipment, net commercial paper total term debt, working capital and the

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cash generated by the various activities (Apple Inc., 2015). It is through the use of these ratios
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that showed that indeed the company was able to meet its current debts and remained in

operation. For instance, dividing the current assets by the current liabilities to determine the
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company current ratios.

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On the other hand, comparative analysis is used to predict the trends after comparing the

financial statements over a period of more than three years. The company, for instance, has
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identified the trend in the gross margin whereby the gross margin seems to be increasing as from

the year 2013 to 2015. The company says that the increase in the gross margin driven by multiple
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factors including lower commodity cost, a favorable shift in the mix to products and much more
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occurred.

Although there are different ways to analyze the financial data, none of the methods is
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better than the other and to come up with an excellent analysis, one must combine many

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methods. Apple being a multinational company realizes all these and have employed these

methods quite extensively in the analysis of their financial statements.

Conclusion

Apple Company is well known for the devices and services that are rendered by this 

company.  The financial ratio of this company is used to examine the company’s profitability, 

competence, and liquidity.  Results are based on Apple’s evaluations, bank investors and

creditors who choose to lengthen or recant financing and potential stockholders may regulate the

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level of commitment for Apple (Miah & Baca, 2014).  The price­earnings ratio is used to show 

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that Apple is paying out dividends to their stockholders.   Apple’s ratios utilized are for the

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company to compose informed decisions about an investment of their products and other
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tangible assets. “The ratios defines the cash equivalents, marketable securities, property, plant
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equipment, net commercial paper total term debt, working capital, and the cash generated by the
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various activities” (Apple Inc., 2015). Apple has been productive and actively increasing their 

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sales and revenue for the past five years.  The company has increase in their gross margin driven 
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by multiple factors include lower cost and a favorable mix in products.  Apple being a
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multinational company realizes all these and have employed these methods quite extensively in

the analysis of their financial statements.

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References:

Accounting Tools. (2016). Retrieved from http://www.accountingtools.com/financial-statement-

analysis

Apple Inc. (2015). Retrieved 28 August 2015, from http://www.edgar.online.com

Cortez, M. A. A., Ikram, M. I. M., Nguyen, T. T., & Pravini, W. P. (2015). Innovation and

Financial Performance of Electronics Compnaies: A Cross-Country Comparison. Journal

of International Business Research, 14(1), 166-179. Retrieved from

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http://search.proquest.com/docview/1693335507?accountid=35812

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Fast Answers. (n.d). Retrieved August 11, 2016, from http://www.sec.gov/answers/annrep.htm

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Garrison, R., Noreen, E., & Brewer, P. (2016). Managerial Accounting [University of Phoenix
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Custom Edition eBook]. : McGraw. Retrieved from University of Phoenix, ACC561

website.
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Miah, M., & Baca, S. (2014). Evaluating company growth by excluding the earnings
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report. Journal of Business Case Studies (Online), 10(1), 83-n/a. Retrieved from

http://search.proquest.com/docview/1477975393?accountid=35812.
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