Ratio Analysis of Apple

Shaheed Benazir Bhutto University Sheringal, Pakistan

Submitted By: Zeshan Ullah

Roll No: 18321

Department: Management Sciences

Program: BBA

Submitted To: Saddam Hussain

 Abstract
Apple Inc. is a technology company that has established itself as a market leader in the

technology industry over the years. After conducting numerous financial ratios, it is evident that

the company has achieved its success by efficiently utilizing its assets and equity. Financial

ratios analysis was undertaken using data downloaded from Yahoo Finance. All financial ratios

were computed over four years between 2016 and 2020. The results were then recorded in a table

and a line graph showing the trend line plotted. Through liquidity ratio analysis, this report

determined that the company is financially healthy and has the ability to meet its short-term

obligations with ease. The company has also succeeded in creating value for the shareholders by

having a positive and growing return on investment. The company’s activity ratios depict how it

turns its stocks quickly and efficiently into cash. On the other hand, an analysis of the company’s

debt ratios indicates that the company does not rely heavily on debt to finance its operations.

Keywords: Liquidity Ratios, Activity Ratios, Debt Ratios, Assets, Equity, Return on Investment,

Shareholders Wealth, Profitability Ratios

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 Apple Ratio Analysis
Apple is a technology company that engages in the design, manufacture, and sale of

mobile communication devices, personal computers, accessories, and related software (Reuters,

2021). The company also engages in developing and selling music players, network solutions,

services, and third-party digital content. Apple was founded in 1971 by Steve Jobs and has since

grown into a multinational company. Apple has established itself over the years as a market

leader in the mobile technology industry. The company achieved the status due to its superior

products and a superior supply chain across the world. This report analyzes the company’s

financial ratios generated by the company in the last five years.

Apple operates under five major segments. These segments are the Americas, Europe, Greater

China, Japan, and the Rest of Asia Pacific. The Americas segment includes North America and

South America. The Europe segment includes all the European countries, India, and the

Middle East. The Great China segment constitutes Hong Kong, China, and Taiwan. The Asian

Pacific segment includes all the Asian countries, Australia, and other regions not represented

under the five segments (Reuters, 2021). Apple develops products like iPhone, Apple Watch,

Mac, Apple TV, and iPod. The company also develops and controls a portfolio of software

applications. Ratio analysis is a quantitative method of gaining information on a company's

liquidity, operational efficiency, and profitability. This company's information is obtained by

studying the company’s financial statements over a period of time. The company’s financial

statements used in ratio analysis include the company's balance sheet and income statements

(Ratio Analysis, 2021). Ratio analysis is a method where users of financial statements like

investors examine the company's ability to convert its assets into liquid cash (Ratio Analysis,

2021).

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 Literature Review
Financial ratios have been used by many investors, managers, and shareholders to

calculate the profitability and financial conditions of a firm. Other parties that use financial ratios

analysis include the customers, suppliers, competitors, and academics. According to Shaikh

(2020), the major objective of ratio analysis is to use the analysis results for decision-making.

Husain and Sunardi (2020) also see financial ratios as a tool that helps to identify and highlight a

company's areas of good and bad performance. Ratios can give the management to identify the

areas of strengths and weaknesses and where further effort or operational change is required

(Fraser et al., 2016)

Various studies reveal the various uses of financial ratio analysis. From the studies, it is

clear that the major use of ratio analysis is for decision-making (Easton et al., 2018). Investors

and managers need a tool or technique that helps them determine the company's future

performance. The results of the analysis enable managers to make efficient and effective

decisions on the best course of action for the company. The actions could be in the form of new

investments, new operational methodologies, or required changes in the workforce (Wadhwa,

2019). Investors use the ratio analysis results to make decisions on the right companies to include

in their investment portfolios.

Apple Inc. is a public company that has various shareholders all over the world. The

performance of the company is, therefore, felt by many investors worldwide. Through ratio

analysis, investors can decide whether to add Apple's stocks in their portfolios or sell their shares

at a specific point. Through ratio analysis, investors can compare Apple Inc.'s performance with

the performance of other companies in the stock market (Allad, 2017).

3
 Data and Methodology
Apple's financial data used in this report was obtained from Yahoo Finance. The data was
used to conduct the ratio analysis in this report. The ratio analysis conducted will be used to
assess Apple's financial activity and liquidity. The data is from Apple's income statements and
balance sheet in the last four financial years. The figures in the data are presented in thousands.
Table 1: Financial Data of Apple (Yahoo Finance)
Item/Year 2020 2019 2018 2017

Current Assets 143,713,000 162,819,000 131,339,000 128,645,000

Current Liabilities 105,392,000 105,718,000 116,866,000 100,814,000

Inventories 4,061,000 4,106,000 3,956,000 4,855,000

Cash 17,773,000 12,204,000 11,575,000 7,982,000

Receivables 37,445,000 45,804,000 48,995,000 35,673,000

Total Assets 323,888,000 338,516,000 365,725,000 375,319,000

Total Liabilities 258,549,000 248,028,000 258,578,000 241,272,00

Sales 274,515,000 260,174,000 265,595,000 229,234,000

Cost of Goods Sold 169,559,000 161,782,000 163,756,000 141,048,000

EBIT 69,559,000 69,313,000 76,143,000 66,412,000

Interest 890,000 1,385,000 2,446,0000 2,878,000

Net Income 57,411,000 55,256,000 59,531,000 48,351,000

Operating Cash 80,674,000 69,391,000 77,434,000 63,598,000

Flow

The data shown in table 1 are financial data for Apple between 2017 and 2020. From the

data, it can be seen that some accounts rose significantly over the years. Cash, for example, rose

from 7,982 million in 2017 to 17,773 million in 2020. This is a sign of positive company growth

4
over the years. Some accounts like operating cash flow and net income have fluctuated over the

years .

Results and Discussion

Liquidity Ratios
Table 2: Liquidity Ratios of Apple (Yahoo finance)
Ratio/Year 2020 2019 2018 2017

Current Ratio 1.36 1.54 1.12 1.28

Quick Ratio 1.33 1.50 1.09 1.23

Cash Ratio 0.17 0.16 0.1 0.08

Current Ratio
Current ratio is calculated using the following equation (Husain et al., 2020);

Current Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Apple’s current ratio using the figures in table 1 is calculated as follows;

Current Ratio 2020 = = 1.36

Current Ratio 2019 = 162,819,000
= 1.54
105,718,000

131,339,000
Current Ratio 2018 = = 1.12
116,866,000

Current Ratio 2017 = 128 ,645,000

= 1.28
100,814,000

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 Apple Current Ratio
1.8

1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2017 2018 2019 2020

Figure 1: Current Ratio of Apple (Yahoo finance)

Quick Ratio
Quick ratio is calculated by using the following formula (Husain et al., 2020):

Quick Ratio = 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠−𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

The figure below represents Apple’s quick ratios between 2017 and 2020.

Apple Quick Ratio

1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2017 2018 2019 2020

6
Figure 2: Apple Quick Ratio (Yahoo finance)

Cash Ratio
Cash Ratio is calculated using the following equation

Cash Ratio = 𝐶𝑎𝑠 ℎ 𝑎𝑛𝑑 𝐶𝑎𝑠ℎ 𝐸𝑞𝑢𝑖𝑣𝑎𝑙𝑒𝑛𝑡𝑠

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

Apple Cash Ratio

0.18

0.16

0.14

0.12

0.1

0.08

0.06

0.04

0.02

0
2017 2018 2019 2020

Figure 3: Apple Cash Ratio (Yahoo finance)

Discussion on the Liquidity Ratios

Liquidity ratios are used by investors and managers to assess the company’s ability to pay

its short-term obligations. One of the liquidity ratios used by managers and investors is the

current ratio. Current ratio indicates whether the company has the ability to repay its debts due

within one year out of the company's current assets. Apple maintained a current ratio of between

1.28 in 2017 and 1.36 in 2020. These ratios indicate that Apple can repay its debts due within

one year out of its assets. The ratio of 1.36 in 2020 means that Apple has $1.28 of current assets

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in every dollar of current liabilities. Apple, therefore, is healthy and has the ability to repay its

short-term liabilities.

Activity Ratios
Table 3: Activity
Ratios of Apple (Yahoo finance)
Ratio/Year 2020 2019 2018 2017

Inventory 41.53 40.13 37.17 31.31

Turnover
Receivable 6.6 5.49 6.27 5.66
Turnover
Total Asset 0.83 0.74 0.72 0.6
Turnover

Inventory Turnover
Inventory Turnover Ratio is the number of times a company restocks its goods in a given

time period, usually one year. Inventory Turnover Ratio can be calculated using the following

formulae (Kwak, 2019);

Cost of Goods Sold

Inventory Turnover Ratio = Average
Inventory

In this case, average inventory is calculated by adding inventory value at the beginning of

the period to the inventory value at the end of the period and dividing the result by two (Kwak,

2019). The following formulae elaborate on how to compute average inventory;

Openning Inventory + Closing Inventory

Average Inventory = 2

The average inventory for Apple is as follows;

4,106,000+4,061,000
Average Inventory for Apple 2020 = = 4,083,500
𝟐

3,956,000+4,106,000

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 Average Inventory for Apple 2019 = = 4,031,000
𝟐
4,855,000+3,956,000
Average Inventory for Apple 2018 = = 4,405,500
𝟐

4,155,000+4,855,000
Average Inventory for Apple 2017 = = 4,505,000
𝟐

A period's opening inventory is equal to the previous period's closing inventory (Kadim et

al., 2020). In the business world, average inventory helps a company's management understand

the amount of inventory that the company needs to hold in a specific time period to not run into

inventory shortages. Having calculated the average inventory for the four years between 2017

and 2020, we go ahead to compute the inventory turnover ratio as follows;

169,559,000
Inventory Turnover Ratio for Apple 2020 = = 41.53
4,083,500 161,782,000

Inventory Turnover Ratio for Apple 2019 = = 40.13

4,031,000 163,756,000

Inventory Turnover Ratio for Apple 2018 = = 37.17

4,405,500 141,048,000

Inventory Turnover Ratio for Apple 2017 = = 31.31

4,505,000

The four years inventory turnover ratio for Apple is plotted in the following graph;

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 Apple Inventory Turnover Ratio
45 40.13 41.53
40 37.17

35 31.31
Inventory Turnover

30
25
20
15
10
5
0
2017 2018 2019 2020
year

Figure 4: Apple Inventory Turnover Ratio (Yahoo finance)

In the day-to-day operations of any business, the inventory turnover ratio implies how

fast the business replaces its stock every period (Tian et al., 2017). The higher the inventory

turnover ratio, the faster the rate at which the company replaces its stocks with new ones. Apple's

sales were faster in 2020 compared to the previous years. On the other hand, Apple had weak

sales in 2017 compared to the following years.

Receivable Turnover
Receivable Turnover Ratio refers to the speed and the efficiency at which a company

collects its debt. The faster a company converts credit sales into cash, the more it becomes

financially stable (Purwanti, 2019). The following is the formulae for the computation of

receivable turnover ratio;

Total Credit Sales

Receivables Turnover Ratio = Average
Receivables

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 In this case, average receivables is computed by adding opening receivables to closing

receivables and dividing the total value by two. The following formulae elaborates the

computation of average receivables (Purwanti, 2019);

Openning Receivables + Closing Receivables

Average Receivables = 2

Average receivables for Apple are computed below;

45,804,000+37,445,000
Average Receivables for Apple 2020 = = 41,624,500
2 48,995,000+45,804,000

Average Receivables for Apple 2019 = = 47,399,500

2 35,673,000+48,995,000

Average Receivables for Apple 2018 = = 42,334,000

2 45,378,000+35,673,000

Average Receivables for Apple 2017 = = 40,525,500

2

Therefore, Receivables Turnover Ratio for Apple is calculated below;

274,515,000
Receivables Turnover Ratio for Apple 2020 = = 6.60
41,624,500 260,174,000

Receivables Turnover Ratio for Apple 2019 = = 5.49

47,399,500 265,595,000

Receivables Turnover Ratio for Apple 2018 = = 6.27

42,334,500 229,234,000

Receivables Turnover Ratio for Apple 2017 = = 5.66

40,525,500

The graph below show receivable turnover for Apple over the four years;

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 Apple Receivables Turnover
7

Receivable Turnover6

0
2017 2018 2019 2020
Year

Figure 5: Apple Receivables Turnover (Yahoo finance)

Total Asset Turnover

The total Assets Turnover ratio shows how efficiently a company generates sales revenue

from its assets. In other words, the assets turnover ratio measures the ability of a company to

maximize the return from its assets. The following formulae are used to compute the total assets

turnover ratio;

Total Sales
Total Assets Turnover Ratio = Average
Total Assets

Average total assets, on the other hand, is calculated using the following formulae;
Assets at the start of the year + Assets at Year End
Average Total Assets = 2

The following are the average total assets for Apple Inc.;
338,516,000+323,888,000
Average Total Assets for Apple 2020 = = 331,202,000
2 365,725,000+338,516,000

Average Total Assets for Apple 2019 = = 352,120,500

2 375,319,000+365,725,000

Average Total Assets for Apple 2018 = = 370,522,000

2 390,125,000+375,319,000

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 Average Total Assets for Apple 2017 = = 382,722,000
2

Therefore, the total assets turnover ratio for Apple Inc. is computed below;
274,515,000
Total Assets Turnover Ratio for Apple 2020 = = 0.83
331,202,000

260,174,000
Total Assets Turnover Ratio for Apple 2019 = = 0.74
352,120,500 265,595,000

Total Assets Turnover Ratio for Apple 2018 = = 0.72

370,522,000 229,234,000

Total Assets Turnover Ratio for Apple 2017 = = 0.60

382,722,000

The graph below indicates Apple’s total assets turnover ratio over the four years between

2017 and 2018; Figure 6: Apple Total Assets Turnover (Yahoo finance)

Apple Total Assets Turnover

35

30

25
Total assets Turnover

20

15

10

0
2017 2018 2019 2020
Year

According to the graph, Apple Inc.'s efficiency and performance have been improving

since 2017. Even without necessarily increasing its assets base, Apple has managed to tap more

and more income from the available assets every other year.

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 Leverage Ratios
Table 4: Leverage Ratios of Apple (Yahoo finance)
Ratio/Year 2020 2019 2018 2017

Debt Ratio 1.07 0.73 0.71 0.64

Times Interest Earned

Ratio 24.21 19.38 23.5 28.59

Debt Ratio
The debt ratio is used to measure a company's amount of leverage. It is the percentage of

the organization's assets that is acquired through debt (Fullwiler, 2016). The formulae for

calculating debt ratio is as follows;

Total Debts
Debt Ratio = Total
Assets

The debt ratio for Apple Inc. is computed as follows;

258,549,000
Debt Ratio for Apple 2020 = = 1.07
241,272,000

248,028,000
Debt Ratio for Apple 2019 = = 0.73
338,516,000

258,578,000
Debt Ratio for Apple 2018 = = 0.71
365,725,000

241,272,000
Debt Ratio for Apple 2017 = = 0.64
375,319,000

The debt ratio figures are plotted in the graph below;

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 Debt Ratio of Apple
35

30

25
Debt ratio

20

15

10

0
2017 2018 2019 2020
Year

Figure 7: Apple Debt Ratio (Yahoo finance)

Times Interest Coverage Ratio

35

30

25

20

15

10

0
2017 2018 2019 2020

Figure 8: Times Interest Coverage Ratio (Yahoo finance)

Apple times earned interest ratio is above the required number, and hence the company

has been in a good solvency position.

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 Profitability Ratios
Table 5: Profitability Ratios of Apple (Yahoo finance)
Ratio/Year 2020 2019 2018 2017

Return on Equity 0.88 0.61 0.55 0.36

Return on Assets 0.18 0.16 0.16 0.13

Profit Margin 20.91% 21.24% 22.41% 21.09%

Return on Equity
Return on equity ratio informs the investors of the amount of profit that the company can

earn for a certain amount of investment. Return on equity ratio is calculated by dividing the net

income made by the company by the shareholder's equity in the company (Myšková et al., 2017).

Return on Equity = 𝑆 ℎ𝑎𝑟𝑒𝑁𝑒𝑡ℎ𝑜𝑙𝑑𝑒 𝐼𝑛𝑐𝑜𝑚𝑒𝑟′𝑠 𝐸𝑞𝑢𝑖𝑡𝑦

Below is a representation of Apple’s return on equity between the years 2017 and 2020.

Apple Return on Equity

1

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2017 2018 2019 2020

Figure 9: Apple Return on Equity (Yahoo finance)

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Return on Assets
Return on Assets (ROA) is used to determine the profitability of a company. Return on

Assets informs the users of financial statements in how efficient the company is in using its

assets. Return on Assets indicates how much profit a company makes relative to its assets. The

ratio is calculated as follows.

𝑁𝑒𝑡 𝐼𝑛𝑐𝑜𝑚𝑒
Return on Assets =
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠

Below is a representation of Apple's Return on Assets between the years 2017 and 2020.

Apple Return on Assets

0.2

0.18

0.16

0.14

0.12

0.1

0.08

0.06

0.04

0.02

0
2017 2018 2019 2020

Figure 10: Apple Return on Assets (Yahoo finance)

Profit Margin
Profit margin is a ratio used by managers and investors to determine the percentage of

profit that a company produces from its total revenue. Profit Margin calculates the amount of

profit that a company makes per dollar of the total revenue gained by the firm. The profit margin

is determined by dividing the net profit by the total revenue. The figure is expressed as a

percentage.

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Profit Margin Ratio = 𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡

𝑅𝑒𝑣𝑒𝑛𝑢𝑒

The figure below represents Apple’s profit margin between the years 2017 and 2020.

Apple Profit Margin

23.00%

22.50%

22.00%

21.50%

21.00%

20.50%

20.00%
2017 2018 2019 2020

Figure 11: Apple Profit Margin (Yahoo finance)

Discussion on the Profitability Ratios

From the profitability ratios analyzed, Apple is a profitable company and has significant

returns to its investors. Return on equity ratio measures the ability of the company to generate

profits from the investments made by shareholders to the company. Return on equity indicates

the efficiency of a business in turning shareholder’s investments into profits. Apple experienced

growth in ROE since 2017 from 0.36 to 0.88 in 2020. This means that Apple is able to generate

$0.88 from a dollar invested in the company. The constant growth of ROE is an indication of a

company with potential growth in profitability.

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 Cash Flow Ratios

Table 6: Cash Flow Ratios of Apple (Yahoo finance)

Ratio/Year 2020 2019 2018 2017

Cash Flow to Total Assets 0.25 0.20 0.21 0.17

Cash Flow to Sales 0.29 0.27 0.29 0.28

Cash Flow to Total Assets

Cash flow to total assets ratio is used to measure the amount of operating cash that a firm

generates for every dollar of the assets owned by the firm. The ratio is calculated by dividing

cash flows from operations by the average total assets of the firm.

Cash Flow to Total Assets = 𝐶𝑎𝑠 ℎ 𝐹𝑙𝑜𝑤𝑠 𝐹𝑟𝑜𝑚 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠

𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠.
The graph below represents Apple’s cash flow to total assets ratio between the years 2017 and

2020.

Apple Cash Flow to Total Assets

0.3

0.25

0.2

0.15

0.1

0.05

0
2017 2018 2019 2020

19
Figure 12: Apple Cash Flows to Total Assets (Yahoo finance)

Cash Flow to Sales

Cash flow to sales ratio compares the operating cash flows of a company in a certain

period to its sales. Cash flow to sales ratio informs investors, managers, and other users of

financial information on the ability of a business to generate cash flows in proportion to the

company's sales volume (Masdupi et al., 2018). The ratio is calculated by dividing the operating

cash flows of a firm in a certain financial period by the net sales made by the company during

that period.

Cash Flow to Sales Ratio = 𝐶𝑎𝑠 ℎ 𝐹𝑙𝑜𝑤𝑠 𝐹𝑟𝑜𝑚 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑜𝑛𝑠

𝑆𝑎𝑙𝑒𝑠.

Below is a representation of Apple’s cash flow to sales ratios between the years 2017 and 2020.

Apple Cash Flow to Sales

0.295

0.29

0.285

0.28

0.275

0.27

0.265

0.26
2017 2018 2019 2020

Figure 13: Apple Cash Flow to Sales

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Comments on the Cashflow Ratios
From the cash flow ratios analyzed, it is clear that Apple generates significant cash flows from

the assets it owns and the sales made. Apple’s cash flow to total assets rose from 0.17 in 2017 to

0.25 in 2020. This indicates that the company is increasing its profitability or profits made from

the assets it owns (Pattiruhu, 2020). A ratio of 0.25 means that for every dollar of assets Apple

owns, the company makes a profit of $0.25. Although the company has not achieved the desired

efficiency, the company makes significant profits. Relative to sales, Apple also makes significant

profits based on the cash flow to sales ratio analysis (AL Zubaidi and Nobanee, 2020) .

Discussion
Apple is a multinational company that has a lot of investors and customers all over the

world. As a publicly-traded company, the company has the aim of creating value for the

shareholders. Every activity, product, or service produced or offered by the company is for the

development of the company and the generation of profits. Over the years, Apple has made

significant progress in the process of creating shareholder value. Based on the profitability,

liquidity, activity, debt, and cash flow ratios analyzed, it is clear that Apple has been performing

well over the years.

As evident in the liquidity ratio analysis, Apple Inc. is a healthy company in terms of

finances and has the ability to repay its short-term liabilities using the assets the company owns.

The company can easily meet its short-term obligations using the current assets the company

owns. This liquidity status has also been improving over the years. The liquidity analysis

indicates a financially stable company that has the potential of performing extremely well in the

future.

The activity and debt ratio analysis performed also indicates a financially stable company

that does not rely heavily on debts for operation. The debt analysis indicates that Apple does not
21
rely on the debt alone for its operations. This is an indication of a stable company that has a good

balance of equity and debt in its working capital. The profitability ratio analysis performed on the

company’s financial statements since 2017 indicates a company that makes a profit and generates

significant returns to investors. Apple experienced growth in ROE since 2017 from 0.36 to 0.88

in 2020. This means that Apple is able to generate $0.88 from a dollar invested in the company.

This is a significant return to the investors with Apple's stocks. The company also has the

potential of growing its return on investments due to the constantly growing return on equity.

Recommendation to Investors
Apple has a positive and significant return on equity. Return on equity indicates how

efficiently the company turns equity into profit. A higher return on equity is an indication that the

company makes higher profits from the equity invested in the company (Musallam, 2018). A

higher return on equity also indicates that the company has the ability to create significant value

for the shareholders of the company.

From the return on equity ratio analysis performed on the company, it is clear that Apple

is a good investment option for any investor in the stock market. In the year 2017, Apple had a

return on equity of 0.36. This means that the company made an income of $0.36 in every dollar

invested by the shareholders. In 2018, the company had a return on equity ratio of 0.55, and in

2019 0.61. By the year 2020, Apple had a return on equity ratio of 0.88. This means that Apple

was able to generate $0.88 for every dollar invested in the company by the shareholders. This

rate of turning equity into income is efficient for any publicly-traded company.

Based on the analysis, Apple can create a significant value for any shareholder in the

company. The efficiency in turning equity to income means that the investors enjoy significant

dividends from the investments they made (Restianti et al., 2018). Apple, therefore, is the best

company to invest in at the moment. The investors enjoy significant dividends every year.

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 The gradual rise or improvement in return on investment also indicates a company that

has the potential of performing extremely well in the future (Ichsani et al., 2021). Apple,

therefore, is a good company to add to the investment portfolio. Due to the high potential, it has

for performing well in the future, the company's stocks could rise in the future. Investors can,

therefore, achieve a gain in their investments in the future.

Conclusions
Apple Inc. is a company that has established itself as a market leader since its formation.

The achievements of the company are evident in the ratio analysis performed. The liquidity ratios

indicate that Apple is financially stable and healthy. The current and quick ratios performed

indicate that the company can repay its short-term liabilities with ease. This is an indication of

positive financial health and a company that can handle its operations with ease.

The debt ratios performed also indicate a company that is not heavily reliant on debts for

operations. A company that heavily relies on debt for daily operations can encounter problems

with rising operational costs. The higher operational costs arise due to the interest expenses that

the debt could attract. The result of the increasing operational costs is reduced profits in the long

run. Apple has achieved a good mix of use of both equity and debt to meet the operational costs

of running the company.

Apple also used its assets to generate profit in an efficient manner. Since 2017, Apple has

recorded a constantly rising assets turnover ratio. This means that as the company grew, its

efficiency in terms of using its assets to generate sales or revenue was improving. Apple used its

assets efficiently to generate revenue for the company.

In general, Apple is a company that is financially healthy and uses its resources

efficiently. The company also generates significant income for the investors. Investors, therefore,

should consider adding Apple's stocks to their investment portfolios. In the long run, Apple's

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stocks could gain significant value in the stock market due to its high potential of performing

well in terms of sales and profit generation.

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