Financial Management

Financial Management. Assignment One – Financial Statement Analysis

This assignment allows you to apply what you have learned to a publicly traded company. For this project, we will analyze Apple’s financial statements. Use this assignment to demonstrate that you have learned what each ratio measures. You should be able to: 1. Calculate the ratios 2. Be able to interpret the ratios and analyze what these ratios mean or indicate.

First, review the financial data provided on Apple’s Annual Report:

https://seekingalpha.com/filing/4679100

Assignment One – Financial Statement Analysis

This assignment allows you to apply what you have learned to a publicly traded company. For

this project, we will analyze Apple’s financial statements. Use this assignment to demonstrate that you have learned what each ratio measures. You should be

able to:

1.Calculate the ratios, and

2.Be able to interpret the ratios and analyze what these ratios mean or indicate.

First, review the financial data provided on Apple’s Annual Report:

https://seekingalpha.com/filing/4679100

Note

that

for

this

assignment

we

are

using

Apple’s

most

recent

annual

report

(i.e., 10-K

filing).

As

Apple’s

fiscal year

ends

in

September,

we

are

using

Apple’s

annual

report

for

the fiscal year that ended

on September 28, 2019 and not Apple’s most recent quarterly report.

Tasks:

1.

Using information from Apple’s most recent annual report, compute the following

ratios:Please include the figures you use from the financial statements.

Example: Cash Ratio= $40,000/$100,000 = 40%.

Showing your work will allow me to award partial credit and more accurate feedback if one of your ratios is incorrect. For ratios that require a share price, use $224 as this was approximately Apple’s share price were announced to the market.

2.Interpret the ratiosm(in one or two sentences per ratio) and comment on the financial condition of Apple in each of the five categories listed

above.

3.Decompose the ROE using Du-Pont Analysis, i.e., decompose ROE into:

ROE = Profit Margin * Total Asset Turnover * Equity Multiplier

= (NI/Sales) * (Sales/TA) * (TA/TE)

4. Compare each component of ROE from the Du-Pont Analysis above for Apple’s most recent fiscal year with its prior fiscal year(s) to understand

any trends. Make sure to comment on any significant changes or any areas that warrant further examination.

The first three ratios together should equal the overall profit margin of the firm (NI/Sales). It is just further broken down so you can see a couple of things:

– The first ratio EBIT Margin tells us about the operational profitability of the firm
– The second tells us about the financing structure of the firm, i.e. how much is interest paid on debt affecting
our profitability?
– The third ratio Tax Burden tells us about the impact of taxes on our pro

Financial Management

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