Title: Financial Analysis of Apple Inc.

For this analysis, we will focus on Apple Inc., a publicly-traded company listed on the U.S. exchange (NASDAQ: AAPL). We will review the annual reports for the fiscal years 2018, 2019, and 2020 to analyze the financial statements and identify significant movements in specific accounts over the years.

Financial Statements Analysis:

1. Balance Sheet Analysis:

– Review changes in assets, liabilities, and equity accounts:- Identify any significant fluctuations in cash, investments, property, plant, and equipment (PPE), long-term debt, and shareholders’ equity.

2. Income Statement Analysis:

– Evaluate revenue, expenses, and net income figures:- Analyze trends in revenue growth, operating expenses, and net income margin over the three-year period.

3. Statement of Cash Flows Analysis:

– Examine operating, investing, and financing activities:- Assess cash flow from operations, capital expenditures, and financing activities to understand the company’s cash flow dynamics.

Ratio Analysis:

1. Debt-to-Equity Ratio:

– Formula: Total Debt / Shareholders’ Equity
– Interpretation: Indicates the proportion of debt financing relative to equity; higher ratios may suggest higher financial risk.

2. Current Ratio:

– Formula: Current Assets / Current Liabilities
– Interpretation: Measures the company’s ability to cover short-term obligations; a ratio above 1 indicates sufficient liquidity.

3. Quick Ratio:

– Formula: (Current Assets – Inventory) / Current Liabilities
– Interpretation: Provides a more stringent measure of liquidity by excluding inventory; a ratio above 1 signifies strong short-term liquidity.

4. Return on Equity (ROE):

– Formula: Net Income / Average Shareholders’ Equity
– Interpretation: Reflects how efficiently the company generates profits from shareholders’ equity; higher ROE indicates better performance.

5. Net Profit Margin:

– Formula: Net Income / Revenue
– Interpretation: Indicates the percentage of revenue that translates into profit; higher margins signify better profitability.

By conducting a thorough analysis of Apple Inc.’s financial statements and calculating key financial ratios for the selected years, we can gain valuable insights into the company’s financial performance, liquidity position, leverage levels, and profitability metrics.

References:

Apple Inc. Investor Relations. (n.d.). Annual Reports. Retrieved from https://investor.apple.com/financials/default.aspx

Damodaran, A. (2019). Investment valuation: Tools and techniques for determining the value of any asset (4th ed.). John Wiley & Sons.