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 2020 Financial Report by Paul Borosky, MBA.
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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'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