Dell and Apple Comparison

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Profitability Ratios

Profit Margin

Profit Margin is a measure of the percentage of each dollar of sales that results in net income. You can find a company’s profit margin by dividing net income into net sales. Based on the chart below we can see that Apple in between 2006 and 2007 had a 4% profit margin increase. This was likely due to the popularity of IPOD’s and the MAC computers. Between 2006 and 2007, they stayed consistent. Based off these data, the next few years the company will most likely stay in the 14% range. On the other hand, Dell’s profit margin was much lower than Apple’s to begin with. Also, Dell took a fall between 2006 and 2007, the same year that Apple’s profit margin rose over 4%. They did make a small increase though between 2007 and 2008. Dell’s profit margin will most likely very slowly increase for the next few years.

200620072008Average
Apple10.30%14.60%14.90%13.27%
Dell6.50%4.50%4.80%5.27%

Profit Margin

Asset Turnover

Asset turnover measures how efficiently a company uses its assets to generate sales. It is determined by dividing net sales into average assets. Both companies’ asset turnover has stayed consistent over the last three years. Apple’s average asset turnover over the last three years generates sales of 1.13 for each dollar it had invested in assets. Dell’s average asset turnover over the last three years generates sales of 2.37 for each dollar it had invested in assets.

200620072008Average
Apple1.31.111.13
Dell2.42.42.32.37

Return on Assets

Return on assets percentages shows how profitable a company’s assets are overall in generating revenue. Based off the chart below we can see that both companies have decent return on assets percentage compared to other stores. They both have been quite inconsistent over the last three years going up one year, and down the next year. Obviously, Dell took quite a fall between 2006 and 2007, similar to their loss in...
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