Description
Deliverable Length: Word document of 500-800 words with attached Excel spreadsheet showing calculations
Locate a publicly traded U.S. company of your choice. Then, calculate the following ratios for the company for 2014 and 2015:
- Liquidity Ratios
- Current ratio [current assets / current liabilities]
- Quick ratio [(current assets – inventory) / current liabilities]
- Asset Turnover Ratios
- Collection period [accounts receivable / average daily sales]
- Inventory turnover [cost of goods sold / ending inventory]
- Fixed asset turnover [sales / net fixed assets]
- Financial Leverage Ratios
- Debt-to-asset ratio [total liabilities / total assets]
- Debt-to-equity ratio [total liabilities / total stockholders’ equity]
- Times-interest-earned (TIE) ratio [EBIT / interest]
- Profitability Ratios
- Net profit margin [net income / sales]
- Return on assets (ROA) [net income / total assets]
- Return on equity (ROE) [net income / total stockholders’ equity]
- Market-Based Ratios
- Price-to-earnings (P/E) ratio [stock price / earnings per share]
- Price-to-book (P/B) ratio [market value of common stock / total stockholders’ equity]
You are now ready to interpret the ratios that you have calculated. If a ratio increased from 2014 to 2015, why do you think that it increased? Is it a good or bad sign that the ratio increased? Please explain.
If a ratio decreased from 2014 to 2015, why do you think that it decreased? Is it a good or bad sign that the ratio decreased? Please explain.
If a ratio was unchanged from 2014 to 2015, why do you think that it was unchanged? Is it a good or bad sign that the ratio was unchanged? Please explain.
Explanation & Answer
Attached.
Apple Inc's Financial Ratios
liquidity ratios
current Ratio
Qiuick ratio
25-Sep-14 25-Sep-15 13-Oct-15 23-Nov-15
1,34
1,4
1,03
1,3
1,5
1,3
0,78
0,98
Assets Turnover ratios
collections period
25 Sep, 2014
accounts receivable/average daily sales
245,567 /14,786 = 17.45
Inventiory turnover
cost of goods sold/ending inventory
131,376/2,132 = 61.61
Fixed asset turnover Sales/net fixed assets
215,639/ 27,010 = 7.8
Financial Leverage Ratios
Debt-to-asset ratio
Total liabilities/total assets
87,032/215,281 = 0.43
debt-to-equity ratio
total liabilities/total stockholders'equity
87,032/128,249 = 0.66
Times-interest-earned ratio/interest
62,828/1,456 = 43.15
Profitability ratios
Net profit margin
net income/sales
total
9,014/46852 = 19.24%
Return on assets
net income/ total assets
36,056/313,644 =11.48%
Return on equity
net income/total stockholders' equity
53.4 billions/115.5 billions = 45.45%
Market-Ba...