Apple Inc. Financial Statements and Financial Ratios Analyzed

Apple Inc.: Brief Summary

Apple Inc., headquartered in Cupertino, CA, is a prominent player in the consumer electronics industry. With over 150,000 employees, the company is led by CEO Tim Cook, CFO Luca Maestri, and Chief Operating Officer Jeffrey Williams.

Apple Inc. excels in designing, manufacturing, and selling a wide range of sought-after products worldwide, including iPhones, Macs, iPods, watches, and accompanying accessories. The company also offers related services like Apple TV, iPads, AppleCare support services, and cloud storage solutions.

In terms of financial analysis, Apple Inc. exhibits a remarkable market capitalization of approximately $2.6 trillion, demonstrating its significant value in the market. With a beta of 1.20, Apple Inc. is slightly riskier than the overall market. As of January 2022, the company reported current earnings per share of $5.61, affirming its strong profitability.

This summary provides a concise overview of Apple Inc.'s location, industry presence, employee count, key executives, product portfolio, related services, financial highlights, and notable market performance.

Apple Financial Report Sources

The sources for the Apple Financial Report authored by Paul Borosky, MBA and owner of Quality Business Plan, include "A Beginner's Guide to Analyzing Apple's Financial Statements and Financial Ratios" and "Apple Inc. Financial Report." These reports are based on a thorough analysis of Apple's financial statements from various years, including the 2022 10k, 2021 10k annual report, 2020 10k annual report, 2019 10k annual report, and 2018 10k annual report. These sources are the foundation for gathering the necessary information to provide comprehensive insights into Apple's financial performance and ratios.

Snipits From Apple Inc. Financial Report by Paul Borosky, MBA.

Section 1: Apple Inc. Income Statement Analyzed

This section provides a comprehensive explanation of the income statement, highlighting its significance in financial analysis. The importance of each income statement line item, such as revenues, gross profits, and more, is discussed in detail. A thorough understanding of Apple's income statement is achieved by defining and delving into each line item.

A summary analysis of Apple's significant income statement trends is presented after discussing income statement line items. This analysis provides key insights into the company's revenue generation, profitability, and cost management over a specified period. By examining the trends in each line item, analysts can identify patterns, strengths, and potential areas for improvement in Apple's financial performance.

This section is valuable for understanding Apple's income statement, interpreting its line items, and gaining insights into the company's financial health and operational efficiency. The summary analysis of income statement trends enhances the overall financial analysis and aids in making informed decisions regarding investment, financial planning, and business strategies related to Apple Inc.

Apple 2022 Summary Income Statement
Column1	2022	2021	2020	2019	2018
Revenues	394,328	365,817	274,515	260,174	265,595
COGS	223,546	212,981	169,559	161,782	163,756
Gross Profit	170,782	152,836	104,956	98,392	101,839
SG&A	25,094	21,973	19,916	18,245	16,705
Depreciation	11,104	11,284	11,056	12,547	10,903
R & D	26,251	21,914	18,273	16,217	14,236
Other	-	-	-	-	-
Total Operating Expenses	51,345	43,887	38,668	34,462	41,844
EBIT	119,437	108,949	66,288	63,930	59,995
Other Income	(334)	258	803	1,807	2,005
Interest Expense	9,543	8,750	12,629	8,805	6,500
EBT	119,103	109,207	67,091	65,737	55,500
Taxes	19,300	14,527	9,680	10,481	13,372
Net Income	99,803	94,680	57,411	55,256	59,531

Importance of Apple's Income Statement for Financial Analysis

The income statement of Apple Inc. plays a crucial role in financial analysis as it provides essential insights into the company's revenue, expenses, and profitability. Analyzing Apple's income statement is significant for several reasons. Firstly, it allows for a thorough assessment of the company's revenue sources, enabling analysts to evaluate its sales performance and revenue growth over time. Secondly, it helps assess Apple's profitability by examining gross profit, operating income, and net income, providing an understanding of the company's ability to generate profits and maintain healthy margins. Additionally, the income statement enables evaluation of Apple's expense management, cost control strategies, and resource efficiency. Comparisons with industry peers and historical data aid in benchmarking and tracking performance. Furthermore, the income statement is a foundation for forecasting, decision-making, financial planning, and investment analysis. Understanding and analyzing Apple's income statement is essential for assessing financial health, profitability, and growth potential.

Sample: Revenue Growth for Apple:

Apple’s revenues increased by an impressive 15.9% from 2017 to 2018.  Also, the organization’s revenue growth rate decreased 2019 by approximately 2%.  Finally, in the last five years, Apple’s annual average revenue growth rate was approximately 13.1%, which is an impressive annual revenue growth rate for a mature company.

Analyst Grade: A

Section 2: Apple Inc. Balance Sheet Analyzed

A detailed examination of each significant line item is conducted in the analysis of Apple Inc.'s balance sheet. This involves defining Apple's balance sheet components, including cash, property, plant and equipment, and liabilities. Each line item is thoroughly reviewed to understand Apple's financial position comprehensively. Following the definition and discussion of each line item, a summary analysis of Apple's important balance sheet components is presented. This analysis offers valuable insights into the company's asset structure, liabilities, and overall financial health. By assessing the balance sheet line items, analysts can identify strengths, weaknesses, and potential areas of improvement within Apple's financial position. Analyzing Apple's balance sheet is crucial in evaluating the company's solvency, liquidity, and long-term stability.

Apple 2022 Summary Balance Sheet
Column1	2022	2021	2020	2019	2018
Cash	23,646	34,940	38,016	48,844	25,913
Short Term Investment	24,658	27,699	52,927	51,713	40,388
Account Receivable	28,184	26,278	16,120	22,926	23,186
Inventory	4,946	6,580	4,061	4,106	3,956
Other	-	-	-	-	-
Current Assets	135,405	134,836	143,713	162,819	93,443
Net PPE	42,117	39,440	36,766	37,378	41,304
Goodwill	-	-	-	-	-
Other	-	-
Total Assets	352,755	351,002	323,888	338,516	365,725
Accounts Payable	64,115	54,763	42,296	46,236	55,888
Accrued Expense	-	-	-	-	32,687
Accrued Taxes	-	-	-	-	-
Notes Payable	9,982	6,000	4,996	5,980	11,964
LT Debt - Current	11,128	9,613	8,773	10,260	8,784
Other				-	-
Total Current Liabilities	153,982	125,481	105,392	105,718	116,866
LT Debt	98,959	109,106	98,667	91,807	93,735
Other
Total Liabilities	302,083	287,912	258,549	248,028	258,578
Common Stock	64,849	57,365	50,779	45,174	40,201
Treasury	-	-	-	-	-
Retained Earnings	(3,068)	5,562	14,966	45,898	70,400
Other
Total Equity	50,672	63,090	65,339	90,488	110,601
Total Equity & Liability	352,755	351,002	323,888	338,516	365,725

Importance of Apple's Balance Sheet for Financial Analysis

Apple's balance sheet holds immense importance in financial analysis as it provides a snapshot of the company's financial position at a specific time. Understanding the significance of Apple's balance sheet is vital for several reasons. Firstly, it enables analysts to assess the company's liquidity and solvency by examining the composition of its assets and liabilities. This evaluation helps determine Apple's ability to meet short-term obligations and withstand financial challenges. Secondly, the balance sheet aids in assessing Apple's capital structure, highlighting the proportion of debt and equity financing. This information assists in evaluating the company's financial stability and risk profile. Furthermore, the balance sheet facilitates performance comparisons and trend analysis, allowing analysts to track Apple's financial position changes over time. Lastly, the balance sheet is a foundation for other financial metrics and ratios, providing valuable inputs for comprehensive financial analysis. Understanding Apple's balance sheet is essential for assessing its financial health, risk profile, and long-term sustainability.

Cash.

Apple’s cash position grew substantially between 2017 and 2019.  The substantial cash position increase, well above previous years’ trends, may indicate that the firm mismanaged this balance sheet line item.  A better strategy would have been to allocate excessive cash funds to short-term investments.

Analyst Grade: A

Section 3: Apple Inc. Financial Ratios Analyzed

In Section 3, a comprehensive analysis of Apple Inc.'s financial ratios is conducted. This analysis focuses on several key financial ratios specifically chosen for Apple Inc. The section begins by providing clear definitions of each financial ratio selected. This ensures a thorough understanding of the ratio's purpose and calculation methodology.

The financial formulas necessary for computing each specific ratio are then presented. This enables readers to apply the formulas to their own analysis or evaluation of Apple Inc. Finally, a concise analysis of Apple's important financial ratios is provided. This analysis highlights the significance of each ratio, offering insights into Apple's financial performance and position. By reviewing and understanding these financial ratios, stakeholders can make informed decisions and assessments regarding Apple Inc.'s financial health, efficiency, profitability, and overall success in the market.

Apple's Current Ratio:

Apple’s current ratio was 1.07 as of 2021.  This indicates the organization has sufficient short-term assets to cover short-term liabilities—an excellent position.

Analyst Grade: A

Importance of Apple's Current Ratio in Financial Analysis

The current ratio is a crucial financial ratio used to analyze Apple Inc.'s financial health. It provides valuable insights into the company's short-term liquidity and ability to meet its current obligations. For several reasons, understanding the importance of Apple's current ratio is vital for financial analysis. Firstly, it helps evaluate the company's working capital management and ability to cover short-term liabilities with its current assets. A higher current ratio indicates a stronger liquidity position, signifying that Apple has sufficient resources to meet its short-term financial obligations. Secondly, it allows for comparisons with industry benchmarks and competitors, providing insights into Apple's relative liquidity position. Moreover, the trend analysis of the current ratio over time helps assess Apple's financial stability and short-term financial performance. By monitoring and interpreting the current ratio, stakeholders can make informed decisions regarding Apple's financial position, risk management, and operational efficiency.

Apple's Return on Assets:

Apple’s return on assets ended 2017 at 12.88%.  Over the next five years, the organization would substantially improve its return on assets ending 2021 at 26.97%.  This shows that the firm is excellently growing sales with fewer assets and controlling asset growth.

Analyst Grade: A

Importance of Apple's Return on Assets for Financial Analysis

Return on Assets (ROA) is a key financial ratio that holds significant importance in the financial analysis of Apple Inc. It measures the company's efficiency in generating profits relative to its total assets. Understanding the importance of Apple's Return on Assets is crucial for several reasons. Firstly, it provides insights into the effectiveness of Apple's asset utilization and management in generating profits. A higher ROA indicates that Apple utilizes its assets efficiently to generate income. Secondly, it allows for comparisons with industry peers and competitors, enabling stakeholders to evaluate Apple's performance relative to its competitors regarding asset efficiency. Moreover, trend analysis of ROA over time helps assess Apple's profitability and operational efficiency. By monitoring and analyzing Apple's Return on Assets, stakeholders can gain valuable insights into the company's financial performance, asset utilization, and profitability, assisting them in making informed decisions regarding investment, financial planning, and business strategies.