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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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
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
|R & D||16,217||14,236||11,581||10,045||8,067|
Apple Inc. Balance Sheet Summary
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
|Short Term Investment||51,713||40,388||53,892||46,671||20,481|
|LT Debt - Current||10,260||8,784||6,496||3,500||2,500|
|Total Current Liabilities||105,718||116,866||100,814||79,006||80,610|
|Total Equity & Liability||338,516||365,725||375,319||321,686||290,345|
Apple Inc. Financial Ratio Summary and Analysis
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
|Net Working Capital||29,640||(35,520)|
Apple Inc. Asset Utilization 2019
|Total Asset Turnover||0.77||0.73|
|Fixed Asset Turnover||6.96||6.43|
|Days Sales Outstanding||32.16||31.86|
|Accounts Receivable Turnover||11.35||11.45|
|Working Capital Turnover||8.78||(7.48)|
|Average Days Inventory||0.17||0.18|
|Average Days Payable||0.02||0.01|
Apple Inc. Profitability Ratios 2019
|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%||%|