2.4 Table P2.4 shows financial statements for Apple (d) Quick (acid-test) ratio
ID: 2607604 • Letter: 2
Question
2.4 Table P2.4 shows financial statements for Apple (d) Quick (acid-test) ratio Computer Corporation. The closing stock price for (e) Inventory-turnover ratio Apple was $68.11 on September 30, 2013. The aver- (f) Day's-sales-outstanding age number of outstanding shares was 6.03 billion. On the basis of the financial data presented, compute the various financial ratios and make an informed analysis of Apple's financial health. (a) Debt ratio (b) Times-interest-earned ratio (g) Total-assets-turnover ratio (h) Profit margin on sales (i) Return on total assets G) Return on common equity (k) Price/earnings ratio (1) Book value per share (c) Current ratioExplanation / Answer
Calculation of Ratios
S NO
Ratio
2013
2012
1.
Debt – equity ratio
Total Liabilities / Equity share capital
Total Liability
83,451,000
57,854,000
Total Stockholder’s equity
123,549,000
118,210,000
Debt – equity
0.6754
0.4894
2
Times interest earned
EBIT / Interest Expense
EBIT
50,155,000
55,763,000
Interest expense
0
0
Times interest earned ratio
Cannot be determined
Cannot be determined
3.
Current Ratio
Current Assets / Current Liabilities
Current Assets
73,286,000
57,653,000
Current Liabilities
43,658,000
38,542,000
Current Ratio
1.6786
1.4958
4.
Quick Ratio
(Cash + Accounts Receivable + Short term Investments) / Current Liabilities
Cash + Accounts Receivable + Short term Investments
14,259,000 + 26,287,000 + 24,094,000 = 64,640,000
10746000 + 18383000 + 21275000 = 50,404,000
Current Liabilities
43,658,000
38,542,000
Quick Ratio
1.48
1.3077
5
inventory turnover
Cost of goods sold / Average Stock
COGS
106,606,000
87,846,000
Stock (Closing assumed average)
1764,000
791,000
Inventory Turnover
60.434
111.05
6
asset turnover
Net Sales / Average total assets
Sales
170,910,000
156,508,000
Average Assets (Closing assumed average)
207,000,000
176,064,000
Asset Turnover
0.82
0.889
7
Profit Margin =
Net Profit / Sales
Net Profit
37,037,000
41,733,000
Net Sales
170,910,000
156,508,000
Profit Margin Ratio
21.67%
26.66%
8
rate of return on assets,
Profit / Average Assets
Profit
37,037,000
41,733,000
Average Assets
207,000,000
176,064,000
Return on assets
17.89%
23.70%
9
8. Return common stock equity
Net Profits / Common Stock
Profits
37,037,000
41,733,000
Common Stock
123,549,000
118,210,000
Return common stock equity
29.98%
35.30%
10
Price Earning Ratio
Market Price / EPS
Market Price
68.11
EPS
37.037 billion / 6.03 = 6.14 per share
PE Ratio
11.093
S NO
Ratio
2013
2012
1.
Debt – equity ratio
Total Liabilities / Equity share capital
Total Liability
83,451,000
57,854,000
Total Stockholder’s equity
123,549,000
118,210,000
Debt – equity
0.6754
0.4894
2
Times interest earned
EBIT / Interest Expense
EBIT
50,155,000
55,763,000
Interest expense
0
0
Times interest earned ratio
Cannot be determined
Cannot be determined
3.
Current Ratio
Current Assets / Current Liabilities
Current Assets
73,286,000
57,653,000
Current Liabilities
43,658,000
38,542,000
Current Ratio
1.6786
1.4958
4.
Quick Ratio
(Cash + Accounts Receivable + Short term Investments) / Current Liabilities
Cash + Accounts Receivable + Short term Investments
14,259,000 + 26,287,000 + 24,094,000 = 64,640,000
10746000 + 18383000 + 21275000 = 50,404,000
Current Liabilities
43,658,000
38,542,000
Quick Ratio
1.48
1.3077
5
inventory turnover
Cost of goods sold / Average Stock
COGS
106,606,000
87,846,000
Stock (Closing assumed average)
1764,000
791,000
Inventory Turnover
60.434
111.05
6
asset turnover
Net Sales / Average total assets
Sales
170,910,000
156,508,000
Average Assets (Closing assumed average)
207,000,000
176,064,000
Asset Turnover
0.82
0.889
7
Profit Margin =
Net Profit / Sales
Net Profit
37,037,000
41,733,000
Net Sales
170,910,000
156,508,000
Profit Margin Ratio
21.67%
26.66%
8
rate of return on assets,
Profit / Average Assets
Profit
37,037,000
41,733,000
Average Assets
207,000,000
176,064,000
Return on assets
17.89%
23.70%
9
8. Return common stock equity
Net Profits / Common Stock
Profits
37,037,000
41,733,000
Common Stock
123,549,000
118,210,000
Return common stock equity
29.98%
35.30%
10
Price Earning Ratio
Market Price / EPS
Market Price
68.11
EPS
37.037 billion / 6.03 = 6.14 per share
PE Ratio
11.093
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