Compare the two companies based on their ratios. Use the last column in the temp

Question

Compare the two companies based on their ratios. Use the last column in the template to write in detail how each company is doing based on the ratios. Compare the company ratios to the industry and each other.
INDUSTRY (APPLE) APPLE, INC INDUSTRY (AMAZON.COM) AMAZON.COM ANALYSI Profitability Ratios (%) 44.46% 66.55 23.12% 23.43% 42 51% 42.51% 17.238 Gross Margin EBITD Margin Operating Margin Pretax Margin Effective Tax Rate 76.388 27.65 14.51% 9.37 22 33% 33.94 2 47% 1498% Financial Strength Quick Ratio Current Ratio LT Debt to Equity Total Debt to Equity Interest Coverage 4696% 141.39% 67.76% 96 03% 6143 20101 P/E Ratio Price to Sales (P/S Price to Book (P/B Price to Tangible Book Price to Cash Flow Price to Free Cash Flow Management Effectiveness (%) Return On Assets Return On Investment Return On Equity 15.31 17.95 293.81 16.63 24.37 55.66 59.19 16.77 23.39 165.69 15.07% 19.27% 15 93% 20.73% 42.86% 716% 9.71% 15 72% 3,04% 11 86% 17.2% 11596 Dividend Yield Payout Ratio Revenue/Empl Net Income/E 201M 454.62K 1.67M 475.72K 83.17K 23.22 341.33K 5.57K 19.96 Employee 365.28K 16.49 Receivable Turnover Inventory Turnover Asset Turnover 28.88

Explanation / Answer

Soln :

Conclusion : iw we would like to invest in any of the 2 companes, suggest to go for apple, as company is maintaining better profit margin, controlling the employee cost and EPS is higher compare to price, which makes it favorable compare to Amazon. Except the interest coverage ratio, for which Amazon is balancing this. P/B is also for apple is comparitively better than Amazon, as net worth of amazon might not be high.Return on Assets, investment and equity , apple is overpowering amazon.

Ratios Analysis Gross Margin Amazon doing better,Margin by apple is lower compare to industry but not in case of amazon EBITD Margin This margin in both cases are better than industry, i.e. both companies performing well Operating Margin Apple is way better than amazon for operating margin Pretax Margin Same as above comment Effective Tax rate Both companies are managing well in terms of taxes, amazon is amazingly taking half Quick ratio In case of liquidation, both companies perform poorly compare to industry standard Current ratio Amazon is having very low , if we will see current ratio compare to Apple and very low overall LT Debt to equity As we can see both companies are having larger debt compare to equity, so leveraging more Debt to equity Again leverage is more short or long Interest coverage Interest coverage of apple is 0 , while amazon is well mantaining the same P/E ratio Apple pricing is better as per P/E but amazon price is way higher than earning per share, seems overvalued P/S In terms of sale, prices are higher for apple and amazon is lower, as amazon business is more volume basis P/B Book value of apple should be high, as hey have manufacturing unit, while amazon have business model where net worth is mainly goodwill. P/tangible book Same as above comment Price to cash flow As we see margin is very low in case of amazon, price to cash flow should be low for amazon compare to apple ROA ROA for apple is as per industry standard but in amazon it is less than half, which gives an upper hand to apple ROI Same case with ROI, apple preferred ROE Again ROE is following the ROA and ROI, as overall profit margin is lower in case of amazon Dividend yield Dividend compare to price is low in case of apple cpmpare to amazon Payout ratio Apple seems to be paying better dividend while amazon is giving dividend on lower side, due to less margns Revenue/ employee Apple is efficient in generating the revenue using manpower, while amazon cost is more in terms of employee Net Income /Employee And so the income per employee , apple is way high compare to industry and amazon Receivable turnover Apple is taking longer compare to industry but amazon is well maintaining this aspect to get the business USP Asset Turnover Asset turnover high for lower margin and high for higher margin and what it shows here for apple and amazon.

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