Full Answer Section

Financing

• Debt-to-equity ratio (D/E): D/E measures the amount of debt a company has relative to its equity. A high D/E ratio indicates that a company is more leveraged and has more debt to repay. AAPL’s D/E ratio for the TTM is 0.33, which is lower than the industry average of 0.61.

Liquidity warnings

• Quick ratio: The quick ratio measures a company’s ability to pay its short-term obligations with its most liquid assets. A high quick ratio indicates that a company has more than enough liquid assets to pay its short-term obligations. AAPL’s quick ratio for the TTM is 1.26, which is higher than the industry average of 1.05.

Strengths

• High ROE: AAPL has a high ROE, which indicates that it is using its assets efficiently and generating a lot of profit.
• Low DSO: AAPL has a low DSO, which indicates that it is collecting its receivables quickly and has good cash flow.
• Low D/E ratio: AAPL has a low D/E ratio, which indicates that it is not highly leveraged and has less debt to repay.
• High quick ratio: AAPL has a high quick ratio, which indicates that it has more than enough liquid assets to pay its short-term obligations.

Weaknesses

• High valuation: AAPL is currently trading at a high valuation, which could make it vulnerable to a decline in the stock market.
• Dependence on iPhone: AAPL’s revenue is heavily dependent on the iPhone, which could make it vulnerable to changes in the smartphone market.
• Risk of increased competition: The smartphone market is becoming increasingly competitive, which could put pressure on AAPL’s margins.

Overall performance

Based on the ratios I selected, AAPL appears to be a well-managed company with strong financials. However, it is important to note that these ratios are just a snapshot of a company’s financial health and should not be used in isolation to make investment decisions.