Apple 2015 Financial Analysis Reveals Higher Profits and Efficiency
1. Apple 2015 Financial Analysis
Full year results released in October 2015 (all numbers in $US)
Oct
2014
Nov
2014
Dec
2014
Jan
2015
Feb
2015
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
Reporting Period
Oct
2014
Nov
2014
Dec
2014
Jan
2015
Feb
2015
Mar
2015
Apr
2015
May
2015
Jun
2015
Jul
2015
Aug
2015
Sep
2015
6. Analysis of the Financial Reports
Profitability
Gross Profit Margin
This Period Last Period Comparison
40.1% 38.6% Better
Sales
$1.00
Gross Profit
40.1c
COGS
59.9c
Income Statement
What does this mean?
For every $1 the firm generates in
sales:
• A Gross Profit of 40.1 cents is
earned
• Once the Cost of Goods Sold is
deducted.
7. Analysis of the Financial Reports
Profitability
Net Profit Margin
This Period Last Period Comparison
22.8% 21.6% Better
Income Statement
$1.00 of
Sales
Gross Profit
40.1c
COGS
59.9c
Net Profit
22.8c
Other
Expenses
17.3c
What does this mean?
For every $1 the firm
generates in sales an
overall Net Profit of
22.8 cents is earned.
8. Analysis of the Financial Reports
This Period
Sales
$1.00
Gross Profit
40.1c
COGS
59.9c
Net Profit
22.8c
Other Exp
17.3c
─
=
─
=
Last Period
Sales
$1.00
Gross Profit
38.6c
COGS
61.4c
Net Profit
21.6c
Other Exp
17.0c
─
=
─
=
Lower COGS… possible
causes?
• Suppliers ↓ prices
• Mark-ups ↑
And a better Net Profit
Margin… possible causes?
• But ↑ in Oth. Exp.???
• ↑ GP > ↑ in Oth. Exp .
9. Analysis of the Financial Reports
Profitability
Return on Assets
This Period Last Period Comparison
18.4% 13.6% Better
What does this mean?
For every $1 of Assets the firm
has, the business is earning a
Net Profit of 18.4 cents.
Business
Net Profit
18.4c
Balance Sheet
Assets Liabilities
Owner’s
Equity
Balance Sheet
Assets Liabilities
$1 Owner’s
Equity
10. Analysis of the Financial Reports
Return on Investment
This Period Last Period Comparison
46.2% 35.4% Better
What does this mean?
For every $1 of Capital invested in
the firm, the business is earning a
Net Profit of 46.2 cents.
Net Profit
46.2c
Balance Sheet
Assets Liabilities
Owner’s Eq.
$1
Business
Balance Sheet
Assets Liabilities
Owner’s Eq.
$1
Profitability
11. Analysis of the Financial Reports
Efficiency
Asset Turnover Ratio
This Period Last Period Comparison
0.80
times
0.63
times
Better
Business
$0.80 of
Sales
Balance Sheet
Assets Liabilities
Owner’s
Equity
Balance Sheet
Assets Liabilities
$1 Owner’s
Equity
What does this mean?
For every $1 of Assets the firm
has, the business generates
$0.80 of sales
12. Analysis of the Financial Reports
Efficiency
This Period
Last Period
Profitability and
DuPont Formula
0.80 times
0.63 times
22.8%
21.6%
18.4%
13.6%
= X
= X
Asset
Turnover
Net Profit
Margin
Return on
Assets
= X
Better
ROA
More
efficient at
making sales
And each sale
made at a
higher Net
Profit
13. Analysis of the Financial Reports
Efficiency
Stock Turnover Ratio
This Period Last Period Comparison
6 days 7 days Better
What does this mean?
The firm takes, on average, 6 days to
sell all of its inventory
0 6 days
Stock
bought
Stock
sold
14. Analysis of the Financial Reports
Liquidity
Working Capital Ratio
This Period Last Period Comparison
1.11 1.08 Better
What does this mean?
For every $1 of Current
Liabilities the firm has, there
are $1.11 in Current Assets to
pay them
Balance Sheet
Current Assets Current Liabilities
$1.53 $1.00
Balance Sheet
Current Assets Current Liabilities
$1.53 $1.00
Balance Sheet
Current Assets Current Liabilities
$1.11 $1.00
15. Analysis of the Financial Reports
Liquidity
Quick Asset Ratio
This Period Last Period Comparison
1.08 1.05 Better
What does this mean?
For every $1 of Urgent
Liabilities the firm has, there
are $1.08 in Quick Assets to
pay them
$1.08
Quick
Assets
$1.00
Urgent
Liabilities
16. Analysis of the Financial Reports
Liquidity
Cash Flow Ratio
This Period Last Period Comparison
1.13 0.94 Better
What does this mean?
For every $1 of Current
Liabilities the firm has, the
firm’s Operating Activities are
generating $1.13 to pay them
Operating
Investing
Financing
$1.13
Cash Balance
$1.00
Current
Liabilities
Nothing
needed
from
here
17. Analysis of the Financial Reports
Stability
Debt Ratio (Gearing)
This Period Last Period Comparison
59% 52% Worse
What does this mean?
59% of the firm’s Total Assets
have been financed with debt
(Liabilities)
Balance Sheet
Assets Liabilities
$1.00 $0.60
Owner’s Equity
$0.40
Balance Sheet
Assets Liabilities
$1.00 $0.60
Owner’s Equity
$0.40
Balance Sheet
Assets Liabilities
$1.00 $0.59
Owner’s Equity
$0.40
Balance Sheet
Assets Liabilities
$1.00 $0.59
Owner’s Equity
$0.41
19. Summary of Results
This Period Last PeriodProfitability
Gross Profit Margin 40.1% 38.6%
Net Profit Margin 22.8% 21.6%
Return on Assets 18.4% 13.6%
Return on Investment 46.2% 35.4%
Efficiency
Asset Turnover Ratio
0.80
times
0.63
times
Stock Turnover Ratio
6
days
7
days
This Period Last PeriodLiquidity
Working Capital Ratio 1.11 1.08
Quick Asset Ratio 1.08 1.05
Cash Flow Ratio 1.13 0.94
Debt Ratio (Gearing) 59% 52%
Stability