I need help making a financial decision about whether to invest or not invest, a

Question

I need help making a financial decision about whether to invest or not invest, and why/why not, (using the data provided from the income statement, balance sheet, ratios, and cash flow statement) in the company posted below:

AAPL Financial model-Saved to my Mac Insert Page Layout Formulas Data Review View Calibri (Body) 12 AA- Wrap Text General Copy Format B IU Paste 'A' ????? ?Merge & Center, $.96 , 68 ,00 Security Warning Extemal Data Connections have been disabled 89 fic 1 Apple Inc. (AAPL) Income Statement Dollars % of Sales s Revenue 6 Total Revenue 7 Cost of Revenue 8 Gross Profit 9 Operating Expenses o Research Development 9/30/1724/16 9/26/15 9/30/17 9/24/16 9/26/15 229,234,000 215,639,000 233,715,000 100% 100% 100% 141,048,000 131,376,000 140,089,000 62% 61%, 60% 198,000 84,263,000 93,626,000 38% 39% 40% 11,581,000 10,045,000 8,067,000 15,261,000 14,194,000 14,329,000 5% 7% 5% 7% 3% 6% - Selling General and Administrative 2 Non Recurring 13 Othens 14 Total Operating Expenses 15 Operating Income or Loss 16 Income from Continuing Operations 61,344,000 60,024,000 71,230,000 27% 28% 30% 2,745.000 1,348,000 1,285,000 196 1%1% 64,089,00061,372,000 72515,000 28% 28%, 31% Total Other Income/Expenses Net 18 Eamings Before Interest and Taxes 19 Interest Expense 20 Income Before Tax -- , 28% 64,089,000 61,372,000 72,515,000 15,738,000 15,685,000 19,121,000 28% 31% 8% Income Tax Expense 22 Minority Interest 3 Net Income From Continuing Ops 24 Non-recurring Events 25 Discontinued Operations 26 Extraordinary lItems 27 Effect Of Accounting Changes 28 Other ltems 29 Net Income 30 Net Income 31 Preferred Stock And Other Adjustments 32 Net Income Applicable To Common Shares 48,351,000 45,687,000 53,394,000 21 % 21% 23% 48,351,000 45,687,000 53,394,000 21% 21% 23% 48,351,000 45,687,000 53,394,000 21% 21% 23% 35 36 Balance Sheet Cash Flow Income Statement Ready

Explanation / Answer

The company is worth investing on the following basis :;

1. Profitability: Consistent profit margins, havong alook at all the profit margins i.e. gross profit margin, operating profit margin and net profit margin, all are consistent and do not show valatality within these 3 years. Moreover, ROE with 36.1% and fixed assets turnover, return on operating assets with good EPS of $9.27 pers share are also showing a positive side. C

2. Liquidity: Current ratio and acid test ratio od more tha one are always good as can be seen in this case. Company's avarage collection period is good with less than 2 months and inventory o/s days of 9 days. however, for these 2 aparameters industry averages should also be considered. Hence on liquidity analuysis is also the positive.

3 Debt : Company's debt has increased from 2015 to 2017, however it is under limites as the total assets of the company are way higher than the debt. So, it shows no risk.

4. Cash flows: Company is consistently showing positive operating cash flows which is great sign and also investing in Capex for the growth purpose. The comapny is also paying regulr dividend to its shareholders.

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