Apple Financial Report and Financial Analysis: 2016 to 2020
Apple Inc. Financial Report and Financial Analysis started with an in-depth review of Apple's 10k Annual report, specifically, Apple's income statement and balance sheet.
Next Paul Borosky, MBA., summarized their financial information and input it into a proprietary financial model, which shows their income statement and balance sheet trends as well as calculations for Apple's financial ratios, and financial ratio trends covering 5 years.
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Apple Inc. Summary
Apple Computer was started by Steve Jobs, Ronald Wayne and Steve Wozniak on April 1st. 1976. Their first product was the Apple 1. The Apple 1was sold for $666.66 with no monitor, keyboard, or housing cover. However, this computer was revolutionary because it came preassembled. At the time, all other computers required assembly (Star, 2016).
Apple's stock started in December 2019, at approximately $64.57. In the next several months, the organization's stock price would increase to approximately $80.65 towards the middle of February 2020; however, once the COVID-19 scare set in, its stock price drop substantially to a low of $60.70 at the beginning of April 2020. From this point, the organization's stock price has rebounded substantially, with the stock price ending at approximately $123.51 as of December 2020.
Apple Inc. Income Statement Summary
Cost of Goods Sold.
In 2016, Apple's cost of goods sold was approximately $131.3 billion or 60.9% of revenues. In the next three years, Apple's cost of goods sold would increase to $161.7 billion or 62.2% of revenues. Fortunately, the company would change up its strategy with a cost of goods sold at $169.5 billion in 2020. However, the cost of goods sold as compared to revenues for 2020 was 61.8%.
Research and Development.
Apple's research and development costs in 2016 were approximately $10 billion. In the next four years, the organization would increase its research and development spending ending 2020 at $18.2 billion.
Operating expenses.
Apple's operating expenses for 2016 were $34.7 billion. In the next two years, the organization's operating expenses would increase to $41.8 billion in 2018. Surprisingly, in the next two years, the organization's operating expenses would fall to $38.6 billion in 2020. As compared to sales, Apple's operating expenses were 16.1% for both 2016 and 2017. However, from 2018 to 2020, the organization's operating expenses as compared to sales would fall to 14.1% in 2020.
Apple Inc. 2020 Income Statement Summary |
|||||
| Column1 |
2020 |
2019 | 2018 | 2017 |
2016 |
| Revenues |
274,515 |
260,174 | 265,595 | 229,234 |
215,639 |
| COGS |
169,559 |
161,782 | 163,756 | 141,048 |
131,376 |
| Gross Profit |
104,956 |
98,392 | 101,839 | 88,186 |
84,263 |
| SG&A |
19,916 |
18,245 | 16,705 | 15,261 |
14,194 |
| Depreciation |
11,056 |
12,547 | 10,903 | 10,157 |
10,505 |
| R & D |
18,273 |
16,217 | 14,236 | 11,581 |
10,045 |
| Other | - | - | - | - | - |
| Operating Expenses |
38,668 |
34,462 | 41,844 | 36,999 |
34,744 |
| EBIT |
66,288 |
63,930 | 59,995 | 51,187 |
49,519 |
| Other Income |
803 |
1,807 | 2,005 | 2,745 |
1,348 |
| Interest Expense |
12,629 |
8,805 | 6,500 | 3,500 |
2,500 |
| EBT |
67,091 |
65,737 | 55,500 | 50,432 |
48,367 |
| Taxes |
9,680 |
10,481 | 13,372 | 15,738 |
15,685 |
| Net Income |
57,411 |
55,256 | 59,531 | 48,351 |
32,682 |
Apple Inc. Balance Sheet Summary
Short-term Investments.
Apple's short-term investments ended 2016 at $46.6 billion. In the next year, Apple would substantially increase their short-term investments to $53.8 billion. However, in 2018, their short-term investment position would fall to $40.3 billion. In the next two years, Apple would moderately increase their short-term investment position ending 2020 at $52.9 billion.
Inventory.
Apple had an inventory holding of approximately $2.1 billion in 2016. In the next year, the organization would substantially increase its inventory position ending 2017 at $4.8 billion. In the next three years, the company would take significant steps to lower their inventory holding ending 2020 at $4 billion.
Property, Plant & Equipment.
Apple ended 2016 with approximately $27 billion in property, plant, and equipment. In the next two years, the organization would substantially increase its property, plant, and equipment ending 2018 at $41.3 billion. However, in the next two years, the organization would take steps to lower its property, plant, and equipment, ending 2020 at approximately $36.7 billion.
Apple Inc. 2020 Summary Balance Sheet |
|||||
|
2020 |
2019 | 2018 | 2017 |
2016 |
|
| Cash |
38,016 |
48,844 | 25,913 | 20,289 |
20,484 |
| Short Term Investment |
52,927 |
51,713 | 40,388 | 53,892 |
46,671 |
| Account Receivable |
16,120 |
22,926 | 23,186 | 17,874 |
15,754 |
| Inventory |
4,061 |
4,106 | 3,956 | 4,855 |
2,132 |
| Other | |||||
| Current Assets |
143,713 |
162,819 | 93,443 | 96,910 |
85,041 |
| Net PPE |
36,766 |
37,378 | 41,304 | 33,783 |
27,010 |
| Goodwill |
- |
- | - | - |
5,414 |
| Other | |||||
| Total Assets |
323,888 |
338,516 | 365,725 | 375,319 |
321,686 |
| Accounts Payable |
42,296 |
46,236 | 55,888 | 44,242 |
37,294 |
| Accrued Expense |
- |
- | 32,687 | 30,551 |
22,027 |
| Accrued Taxes |
- |
- | - | - |
- |
| Notes Payable |
4,996 |
5,980 | 11,964 | 11,977 |
8,105 |
| LT Debt - Current |
8,773 |
10,260 | 8,784 | 6,496 |
3,500 |
| Other | - | - | - | - | |
| Total Current Liabilities |
105,392 |
105,718 | 116,866 | 100,814 |
79,006 |
| LT Debt |
98,667 |
91,807 | 93,735 | 97,207 |
75,427 |
| Other | |||||
| Total Liabilities |
258,549 |
248,028 | 258,578 | 241,272 |
193,437 |
| Common Stock |
50,779 |
45,174 | 40,201 | 35,867 |
31,251 |
| Treasury | - | - | - | - | - |
| Retained Earnings |
14,966 |
45,898 | 70,400 | 98,330 |
96,364 |
| Other | |||||
| Total Equity |
65,339 |
90,488 | 110,601 | 134,197 |
127,615 |
| Total Equity & Liability |
323,888 |
338,516 | 365,725 | 375,319 |
321,686 |
Apple Inc. Financial Ratio Summary and Analysis
Cash Ratio
Apple's cash ratio ended 2016 at .26. In the next year, the organization's cash ratio would fall to .20. Fortunately, the firm would rebound their cash ratio ending 2020 at .36. A .36 cash ratio seems to indicate that the firm is not overly heavy in cash.
Days Sales Outstanding
Apple's days' sales outstanding ended 2016 at 26.6. In the next three years, the company's days sales outstanding would increase to 32.1. Fortunately, in 2020, the company would be able to reduce its days' sales outstanding and end the year at 21.4.
Net Profit Margin
Apple's net profit margin ended in 2016, at 15.1%. In the next two years, the organization's net profit margin would increase to 22.4% in 2018. However, the organization's net profit margin would slightly decline in the next two years ending 2020 at 20.9%.
Apple Liquidity Ratios 2020 |
|||||
| Ratios |
2020 |
2019 | 2018 | 2017 |
2016 |
| Current Ratio |
1.36 |
1.54 |
|||
| Cash Ratio |
0.36 |
0.46 |
|||
| Quick Ratio |
1.33 |
1.50 |
|||
| Net Working Capital |
15,901 |
29,640 |
|||
Apple Asset Utilization 2020 |
|||||
| Ratios |
2020 |
2019 | 2018 | 2017 |
2016 |
| Total Asset Turnover |
0.85 |
0.77 |
|||
| Fixed Asset Turnover |
7.47 |
6.96 |
|||
| Days Sales Outstanding |
21.43 |
32.16 |
|||
| Inventory Turnover |
67.60 |
63.36 |
|||
| Accounts Receivable Turnover |
17.03 |
11.35 |
|||
| Working Capital Turnover |
17.26 |
8.78 |
|||
| AP Turnover |
6.49 |
5.63 |
|||
| Average Days Inventory |
8.74 |
9.26 |
|||
| Average Days Payable |
91.05 |
104.31 |
|||
| Cash Conversion Cycle |
(60.87) |
(62.89) |
|||
Apple Profitability Ratios 2020 |
|||||
|
Ratios |
2020 | 2019 | 2018 | 2017 |
2016 |
| Return on Assets |
17.73% |
16.32% |
|||
| Return on Equity |
87.87% |
61.06% |
|||
| Net Profit Margin |
20.91% |
21.24% |
|||
| Gross Profit Margin |
38.23% |
37.82% |
|||
| Operating Profit Margin |
24.15% |
24.57% |
|||
| Basic Earning Power |
20.47% |
18.89% |
|||
| ROCE |
30.34% |
27.46% |
|||
| Capital Employed |
218,496 |
232,798 |
|||
| ROIC |
107.70% |
80.18% |
|||
Apple Long-term Debt 2020 |
|||||
| Ratios |
2020 |
2019 | 2018 | 2017 |
2016 |
| Debt Ratio |
30.46% |
27.12% |
|||
| Debt/Equity |
151.01% |
101.46% |
|||
| Times Interest Earned |
5.25 |
7.26 |
|||