Apple Inc. Financial Statements and Financial Ratios Analyzed from 2015 to 2019
“Apple Inc. 2019 Company Analysis… For Beginners: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan. In this book, the author selected Apple’s 2018 10k, Apple’s 2017 10k annual report, Apple’s 2016 10k annual report, Apple’s 2015 10k annual report, and Apple’s 2019 10k annual report as the basis for information gathering.
Apple: Brief Summary
Apple Inc. is currently located at One Apple Park Way in Cupertino, CA. the organization competes in the consumer electronics industry. Currently, the firm employs over 100,000 individuals. Their CEO is Tim Cook. As for CFO, this would be Luca Maestri. Finally, their chief operating officer is Jeffrey Williams.
Apple Incorporated specializes in designing and manufacturing communication devices, such as phones and iPads. In addition, the organization also generates revenues from their online store and various licenses agreements. Popular products for the organization includes iPhone, iPad, iMac, and iWatch.
Currently, the company has a market capitalization of approximately $955 billion. The company’s data is .91. This indicates that the firm is slightly less risky as compared to the overall market. As for earnings, the firm has a current earnings per share of 12.12.
Table of Contents
- Page Count: 90 pages
- Apple Company Summary
- Financial Statement Introduction
- Apple Income Statement
- Apple’s Income Statement – Summary Analysis
- Apple’s Income Statement Discussion
- Apple’s Balance Sheet
- Apple’s Balance Sheet – Summary Analysis
- Apple’s Balance Sheet Discussion
- Apple’s Financial Ratios
- Apple’s Liquidity Ratios
- Apple’s Liquidity Ratios – Summary Analysis
- Apple’s Liquidity Ratios Discussion
- Apple’s Asset Ratios
- Apple’s Asset Utilization Ratios – Summary Analysis
- Apple’s Asset Utilization Ratios Discussion
- Apple’s Profitability Ratios
- Apple’s Profitability Ratios – Summary Analysis
- Apple’s Profitability Ratios Discussion
- Apple’s Debt Ratios
- Apple’s Debt Ratios – Summary Analysis
- Apple’s Debt Ratios Discussion
- WACC
- Book Value of WACC
- Apple’s Free Cash Flow (FCF)
- Apple’s Free Cash Flows – 2015 – 2019
- Apple’s Free Cash Flows – 5 Year Projections
- Apple’s Income Statement – Projections for 5 years
- Apple’s Income Statement – 5 Year Projections
- Apple’s Balance Sheet – Projections for 5 years
- Apple’s Balance Sheet – 5 Year Projections
Section 1: Apple Inc. Income Statement Analyzed 2015 to 2019
In this section, I walk through a broad definition as to what an income statement is and why it is important. From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail. After each line item is defined and discussed, I finally offer a summary analysis of Apple’s important income statement line item trends from 2015 to 2019, in most cases.
Revenue Growth for Apple: The average annual growth rate for Apple’s revenues over the last five years has been approximately 3.1%. From 2016 to 2017, the company had outstanding growth at about 15.9%. For the last year, the growth dropped by 2%. The main driver for revenue growth has been new innovative products released by the organization.
SG&A: SG&A has continued to grow, as a percentage of sales, in the last five years. This indicates that the organization is continually adding additional overhead costs to the organization at a faster pace than revenue growth.
Apple Inc. Income Statement 2019 |
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| 2019 | 2018 | 2017 | 2016 | 2015 | |
| Revenues | 260,174 | 265,595 | 229,234 | 215,639 | 233,715 |
| COGS | 161,782 | 163,756 | 141,048 | 131,376 | 140,089 |
| Gross Profit | 98,392 | 101,839 | 88,186 | 84,263 | 93,626 |
| SG&A | 18,245 | 16,705 | 15,261 | 14,194 | 14,329 |
| Depreciation | - | - | - | - | - |
| R & D | 16,217 | 14,236 | 11,581 | 10,045 | 8,067 |
| Other | - | - | - | - | - |
| Operating Expenses | 34,462 | 30,941 | 26,842 | 24,239 | 22,396 |
| EBIT | 63,930 | 70,898 | 61,344 | 60,024 | 71,230 |
| Other Income | 1,807 | 2,005 | 2,745 | 1,348 | 1,285 |
| Interest Expense | 8,805 | 6,500 | 3,500 | - | - |
| EBT | 65,737 | 66,403 | 60,589 | 61,372 | 72,515 |
| Taxes | 10,481 | 13,372 | 15,738 | 15,685 | 19,121 |
| Net Income | 55,256 | 59,531 | 48,351 | 45,687 | 53,394 |
| Tax Rate | 15.9% | 20.1% | 26.0% | 25.6% | 26.4% |
Section 2: Apple Inc. Balance Sheet Analyzed from 2015 to 2019
For Apple Inc. balance sheet, I again go through each important line item from the balance sheet. In reviewing each line item, I will define the Apple’s balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2014 to 2018. Next, I then offer an analysis of Apple’s balance sheet line item.
Cash: Apple’s cash position ended in 2015 at $21.1 billion. For 2019, the cash position more than doubled to $48.8 billion. This indicates that the organization may not be fully exploiting cash usage. A better action would be for the company to invest additional money into short-term investment vehicles. At least the significant cash pile will be earning some type of return for the organization.
Accounts Receivable: The Accounts Receivable for Apple was 8.8% of sales in 2019. This is a significant increase from 2015, which was 7.2%. This means that Apple may be loosening the credit availability to retailers. This could also mean that Apple’s Accounts Receivable department may not be as efficient as in previous years.
Apple Inc. Summary Balance Sheet 2019 |
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| 2019 | 2018 | 2017 | 2016 | 2015 | |
| Cash | 48,844 | 25,913 | 20,289 | 20,484 | 21,120 |
| Short Term Investment | 51,713 | 40,388 | 53,892 | 46,671 | 20,481 |
| Account Receivable | 22,926 | 23,186 | 17,874 | 15,754 | 16,849 |
| Inventory | 4,106 | 3,956 | 4,855 | 2,132 | 2,349 |
| Other | 12,352 | 37,896 | 31,735 | 21,828 | 28,579 |
| Current Assets | 162,819 | 131,339 | 128,645 | 106,869 | 89,378 |
| Net PPE | 37,378 | 41,304 | 33,783 | 27,010 | 22,471 |
| Goodwill | - | - | - | 5,414 | 5,116 |
| Other | 32,978 | 324,421 | 324,421 | 289,262 | 262,758 |
| Total Assets | 338,516 | 365,725 | 375,319 | 321,686 | 290,345 |
| Accounts Payable | 46,236 | 55,888 | 44,242 | 37,294 | 35,490 |
| Accrued Expense | - | 32,687 | 30,551 | 22,027 | 25,181 |
| Accrued Taxes | - | - | - | - | - |
| Notes Payable | 5,980 | 11,964 | 11,977 | 8,105 | 8,499 |
| LT Debt - Current | 10,260 | 8,784 | 6,496 | 3,500 | 2,500 |
| Other | - | - | - | - | - |
| Total Current Liabilities | 105,718 | 116,866 | 100,814 | 79,006 | 80,610 |
| LT Debt | 91,807 | 93,735 | 97,207 | 75,427 | 53,329 |
| Other | 50,503 | 164,843 | 144,065 | 118,010 | 117,661 |
| Total Liabilities | 248,028 | 258,578 | 241,272 | 193,437 | 170,990 |
| Common Stock | 45,174 | 40,201 | 35,867 | 31,251 | 27,416 |
| Treasury | - | - | - | - | - |
| Retained Earnings | 45,898 | 70,400 | 98,330 | 96,364 | 92,284 |
| Other | - | (3,454) | (150) | 634 | (345) |
| Total Equity | 90,488 | 107,147 | 134,047 | 128,249 | 119,355 |
| Total Equity & Liability | 338,516 | 365,725 | 375,319 | 321,686 | 290,345 |
Section 3: Apple Inc. Financial Ratios Analyzed from 2015 to 2019
For this section, I have chosen about 16 different financial ratios to review for Apple Inc from 2014 to 2018. In reviewing each of Apple’s financial ratios, I first start with defining the financial ratio. Next, I supply the financial formula for calculating the specific ratio. Finally, I offer a brief analysis of Apple’s Financial ratio. Ratios calculated and analyzed for the last five years include:
- Apple’s current ratio for 2015 to 2019
- Apple’s quick ratio for 2015 to 2019
- Apple’s cash ratio for 2015 to 2019
- Apple’s total asset turnover for 2015 to 2019
- Apple’s fixed asset turnover for 2015 to 2019
- Apple’s Days Sales Outstanding for 2015 to 2019
- Apple’s Inventory Turnover for 2015 to 2019
- Apple’s Accounts Receivable Turnover for 2015 to 2019
- Apple’s accounts payable turnover for 2015 to 2019
- Apple’s return on assets (ROA) for 2015 to 2019
- Apple’s return on equity (ROE) for 2015 to 2019
- Apple’s profit margin for 2015 to 2019
- Apple’s gross profit margin for 2015 to 2019
- Apple’s operating profit margin for 2015 to 2019
- Apple’s long-term debt ratio for 2015 to 2019
- Apple’s debt to equity ratio for 2015 to 2019
- Apple’s times interest earned for 2015 to 2019
Popular Apple Financial Ratios
Current Ratio: Apple’s current ratio increased to 1.54 in 2019. This is substantially up from 1.12 and 2018. The main reason for the significant increase is the organization’s horde of cash.
Total Asset Turnover: Total asset turnover for Apple increased slightly from .73 in 2018 to .77 and 2019. This increase shows that the firm increases its overall efficiencies about their assets.
Fixed Asset Turnover: The fixed asset turnover for Apple increased from 6.43 in 2018 to 6.96 in 2019. This indicates that the company used its fixed assets like equipment and factories at a higher operating efficiency as compared to the previous year.
Return on Assets: Apple’s return on assets in 2015 at 18.39%. As of 2019, the return on assets fell to 16.32%. This indicates that the company is utilizing its assets less efficiently over the last five years. To mitigate this issue, the organization may choose to lower their prices to increase sales and elevate their asset utilization. Or, the company may choose to liquidate some of their assets to better align with company needs.
Return on Equity: In 2015, Apple's return on equity was 44.74%. This ratio skyrocketed to 61.06% in 2019. The main driver for the return on equity increase could be that the company is using more debt for growth and operations as compared to equity. Also, the growth in dividend payments may help because the cash payouts reduce the overall total assets. This in turn, slightly increases the return on equity.
Apple Inc. Liquidity Ratios 2019 |
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| Ratios | 2019 | 2018 | 2017 | 2016 | 2015 |
| Current Ratio | 1.54 | 1.12 | |||
| Cash Ratio | 0.46 | 0.22 | |||
| Quick Ratio | 1.50 | 1.09 | |||
| Net Working Capital | 29,640 | (35,520) | |||
Apple Inc. Asset Utilization 2019 |
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| Ratios | 2019 | 2018 | 2017 | 2016 | 2015 |
| Total Asset Turnover | 0.77 | 0.73 | |||
| Fixed Asset Turnover | 6.96 | 6.43 | |||
| Days Sales Outstanding | 32.16 | 31.86 | |||
| Inventory Turnover | 63.36 | 67.14 | |||
| Accounts Receivable Turnover | 11.35 | 11.45 | |||
| Working Capital Turnover | 8.78 | (7.48) | |||
| AP Turnover | 5.63 | 4.75 | |||
| Average Days Inventory | 0.17 | 0.18 | |||
| Average Days Payable | 0.02 | 0.01 | |||
Apple Inc. Profitability Ratios 2019 |
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| Ratios | 2019 | 2018 | 2017 | 2016 | 2015 |
| Return on Assets | 16.32% | 16.28% | % | ||
| Return on Equity | 61.06% | 55.56% | % | ||
| Net Profit Margin | 21.24% | 22.41% | % | ||
| Gross Profit Margin | 37.82% | 38.34% | % | ||
| Operating Profit Margin | 24.57% | 26.69% | % | ||
| Basic Earning Power | 18.89% | 19.39% | % | ||
| ROCE | 27.46% | 28.49% | % | ||
| Capital Employed | 232,798 | 248,859 | |||
| ROIC | 80.18% | 978.92% | % | ||