EXAMINATION

Topics: Balance sheet, Financial ratios, Generally Accepted Accounting Principles Pages: 24 (4147 words) Published: January 5, 2014
Financial and Managerial
Accounting (AC 630 B)
FALL TERM 2005

Thursdays
Instructor: Mr. Andreas Rambow

Research Assignment
Financial Analysis: Apple Computer Inc.

Prepared By: Yeo Bee Lin
Date: December 8, 2005

Page 1 of 11

Contents

1. Financial Analysis .........................................................................................3 1.1. Company Overview...................................................................................3 1.2. Ratio Analysis ...........................................................................................4 1.2.1. Profitability .......................................................................................4 i.

Return on Investment ......................................................................4

ii.

Return on Investment (DuPont Model) ............................................4

iii.

Return on Equity..............................................................................5

iv.

Price Earnings Ratio........................................................................6

v.

Dividend Yield, Dividend Payout,
and Preferred Dividend Coverage Ratio..........................................6

1.2.2. Working Capital and Measures of Liquidity .....................................6 i.

Working Capital ...............................................................................6

ii.

Current Ratio ...................................................................................6

iii.

Acid-Test Ratio ................................................................................7

1.2.3. Activity (Assets Management) .........................................................7 i.

Total Assets Turnover .....................................................................7

ii.

Inventory Turnover ..........................................................................8

iii.

Number of Days’ Sales in Accounts Receivables ............................9

iv.

Number of Days’ Sales in Inventory ................................................9

1.2.4. Financial Leverage ........................................................................10 i.

Debt Ratio .....................................................................................10

ii.

Debt/Equity Ratio...........................................................................10

iii.

Times Interest Earned ...................................................................10

2. Conclusion ...................................................................................................11

Page 2 of 11

1. Financial Analysis
1.1. Overview
Is Apple Computer Inc., (Apple) growth sustainable? This is the research report on Apple’s Year 2005 (September 24, 2005) financial statements to analyze its business and financial sustainability in comparisons with the industry giant Dell, Inc (Dell) Year 2005 (January 28, 2005). Below are the small introductions on Apple Computer Inc. and Dell, Inc. Apple had a long history in the design, manufacture, and marketing of personal computers (Power Mac) and related software, services, peripherals, and networking solutions worldwide. Apple currently enjoyed more than 87.3% market share worldwide for its iPod on MP3 players’ and its personal computer products Macintosh enjoyed approximately 2% of worldwide PC markets. Along with iPod, the company also designs, develops, and markets the related accessories and services. Apple also offers online music stores with its iTunes software made available for both Mac OS and Windows. Its online music store accounted for 70% of the legal download market. Apple offers PowerSchool software product, a Web-based student information system for K-12 schools and schools districts; and a variety of other service and support offerings. It also offers various Apple-branded computer hardware peripherals, including iSight digital video...
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