Apple Financial Report and Financial Analysis: 2015 to 2019

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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Each Public Company Financial Report will include:

  • Summarized income statement for the last 5 years.
  • Summarized balance sheet for the last 5 years.
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  • Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
  • Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
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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 stock price started 2019 at $144.53.  It ended the year with a stock price of $297.14.  This is a growth rate annually of 105.6%.  From an investor’s perspective, this growth rate well exceeds overall market returns.

Apple has been consistently paying dividends over the last five years.  Further, their dividend payments have been growing continuously as well.  However, the actual growth rate for dividends has been declining.  In 2016, the growth rate for dividends was 9.85%.  However, in 2019, this growth rate slowed to 7.8%.  Investors should expect this growth rate declined to continue for your seeable future. 

Apple Inc. Income Statement Summary

Interest Expenses

In the last three years, Apple's interest expense payment has grown from 3.5 billion to $8.8 billion.  This means that the organization seems to be using more debt financing for growth and operations as compared to equity financing.  This is beneficial for the company because they are exploiting low-interest rates in the marketplace.  However, as the interest expense increases, then so does the interest payments.  This means that the firm is continually taken on additional risks in the marketplace.

Apple Inc. Income Statement 2019
2019 2018 2017 2016 2015
Revenues                  260,174                  265,595                  229,234                  215,639                    233,715
COGS                  161,782                  163,756                  141,048                  131,376                    140,089
Gross Profit                    98,392                  101,839                    88,186                    84,263                      93,626
SG&A                    18,245                    16,705                    15,261                    14,194                      14,329
Depreciation                            -                            -                            -                            -                             -
R & D                    16,217                    14,236                    11,581                    10,045                        8,067
Other                            -                            -                            -                            -                             -
Operating Expenses                    34,462                    30,941                    26,842                    24,239                      22,396
EBIT                    63,930                    70,898                    61,344                    60,024                      71,230
Other Income                      1,807                      2,005                      2,745                      1,348                        1,285
Interest Expense                      8,805                      6,500                      3,500                            -                             -
EBT                    65,737                    66,403                    60,589                    61,372                      72,515
Taxes                    10,481                    13,372                    15,738                    15,685                      19,121
Net Income                   55,256                   59,531                   48,351                   45,687                    53,394
Tax Rate 15.9% 20.1% 26.0% 25.6% 26.4%

Apple Inc. Balance Sheet Summary

Accounts Payable

Apple’s Accounts Payable declined as a percentage of sales in the last year.  In 2018, the Accounts Payable, as a percentage of sales, was 21%.  In 2019, the organization's Accounts Payable, as a percentage of sales, failed to 17.8%.  This shows that the company is paying its debt to vendors at a faster pace.  A reason for this may be the excess money stored in the company’s cash line item.

Long Term Debt

Apple decreased its long-term debt from 93 billion in 2018 to 91.8 billion in 2019.  However, this was an increase as the total percentage of assets.  In 2018, long-term debt as a total percent of assets was 25.6%.  In 2019, this grew to 27.1%.  This shows that the organization is using more debt for operations and growth as compared to equity, even though the dollar amount fell.  Anytime more debt is used in operations does increase the overall risk for the organization.

Apple Inc. Summary Balance Sheet 2019
2019 2018 2017 2016 2015
Cash                      48,844                  25,913                  20,289                  20,484                  21,120
Short Term Investment                      51,713                  40,388                  53,892                  46,671                  20,481
Account Receivable                      22,926                  23,186                  17,874                  15,754                  16,849
Inventory                        4,106                    3,956                    4,855                    2,132                    2,349
Other                      12,352                  37,896                  31,735                  21,828                  28,579
Current Assets                  162,819              131,339              128,645              106,869                89,378
Net PPE                      37,378                  41,304                  33,783                  27,010                  22,471
Goodwill                              -                         -                         -                    5,414                    5,116
Other                      32,978                324,421                324,421                289,262                262,758
Total Assets                  338,516              365,725              375,319              321,686              290,345
Accounts Payable                      46,236                  55,888                  44,242                  37,294                  35,490
Accrued Expense                              -                  32,687                  30,551                  22,027                  25,181
Accrued Taxes                              -                         -                         -                         -                         -
Notes Payable                        5,980                  11,964                  11,977                    8,105                    8,499
LT Debt - Current                      10,260                    8,784                    6,496                    3,500                    2,500
Other                              -                         -                         -                         -                         -
Total Current Liabilities                    105,718                116,866                100,814                  79,006                  80,610
LT Debt                      91,807                  93,735                  97,207                  75,427                  53,329
Other                      50,503                164,843                144,065                118,010                117,661
Total Liabilities                  248,028              258,578              241,272              193,437              170,990
Common Stock                      45,174                  40,201                  35,867                  31,251                  27,416
Treasury                              -                         -                         -                         -                         -
Retained Earnings                      45,898                  70,400                  98,330                  96,364                  92,284
Other                              -                  (3,454)                     (150)                       634                     (345)
Total Equity                    90,488              107,147              134,047              128,249              119,355
Total Equity & Liability                  338,516              365,725              375,319              321,686              290,345

Apple Inc. Financial Ratio Summary and Analysis

Cash Ratio

Apple’s cash ratio increased from .22 in 2018 to .46 and 2019.  This further shows that the company has access cash that is sitting idle and bank accounts.  To fully exploit this opportunity, more money should be moved into short-term investments or, better yet, return to investors in the form of dividends.

Days Sales Outstanding

In 2019, the days' sales outstanding was at 32.16.  Last year, this ratio was at 31.8.  In 2015, the days sales outstanding were sitting at 26.3.  This trend shows that the company is offering looser credit terms for retailers.  With a significant cash position, the company may be able to do this without incurring a cash crunch over the long-term.

Net Profit Margin

Net profit margin for Apple fell from 22.9% in 2015 to 21.2% in 2019.  The slight decrease is nominal.  Overall, the net profits for Apple will exceed overall market expectations.  This one ratio alone may be the reason why the stock price has grown substantially over the last 12 months.

Apple Inc. Liquidity Ratios 2019
Ratios 2019 2018 2017 2016 2015
Current Ratio                           1.54                    1.12
Cash Ratio                           0.46                    0.22
Quick Ratio                           1.50                    1.09
Net Working Capital                       29,640              (35,520)

Apple Inc. Asset Utilization 2019
Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           0.77                    0.73
Fixed Asset Turnover                           6.96                    6.43
Days Sales Outstanding                         32.16                  31.86
Inventory Turnover                         63.36                  67.14
Accounts Receivable Turnover                         11.35                  11.45
Working Capital Turnover                           8.78                  (7.48)
AP Turnover                           5.63                    4.75
Average Days Inventory                           0.17                    0.18
Average Days Payable                           0.02                    0.01

Apple Inc. Profitability Ratios 2019
Ratios 2019 2018 2017 2016 2015
Return on Assets 16.32% 16.28% %
Return on Equity 61.06% 55.56% %
Net Profit Margin 21.24% 22.41% %
Gross Profit Margin 37.82% 38.34% %
Operating Profit Margin 24.57% 26.69% %
Basic Earning Power 18.89% 19.39% %
ROCE 27.46% 28.49% %
Capital Employed                     232,798              248,859
ROIC 80.18% 978.92% %