Current Ratio

The current ratio, one of the most commonly cited financial ratios, measures the firm’s ability
to meet its short-term obligations. It is expressed as

Current Ratio = Current Assets/ Current Liabilities

Current Ratio

1.35
1.28
1.12

2016 2017 2018

The current ratio of Apple sustained backlash although the three years due to lack of
maintenance in balancing the asset and liabilities. The asset was increasing in a deceasing ratio
but the liability was increasing in increasing ratio. The highly increasing trend in asset is mostly
to blame the drop in current ratio. If we look at the situation externally, it would seem
abnormal but the main fact behind the liability increase was Apple’s changing capital structure.
They are actually taking more debt to repurchase the capital in the market by taking low
interest rate in the market. That’s why their debt is catching up the increasing trend meanwhile
current ratio is catching up the decreasing trend. That is actually helping Apple to have more
control in its asset as well as decision making.

Quick Ratio

The quick ratio (Acid - Test) is similar to the current ratio except it removes the least liquid
assets like inventory, and prepaid expense from the current asset and then divides the
remainder by current liabilities. It is calculated by

Quick ratio = (Current Asset - Inventory)/ Current Liabilities

Quick Ratio
1.33
1.23
1.09

2016 2017 2018

Apple experienced substantial and constant drop in quick ratio from 2016 to 2018. This massive
drop was due to the substantial increase of the current liabilities in those years. As we saw
above the current ratio decline was also affected by the current liability uptick. Although the
current asset of the company was having increasing trend, but that could not make up the ratio
to be stable. Due to the change in capital structure, decided by the Apple administration, the
debt of the company is burgeoning. They are actually buying up their share of capital already
issued in the market, using more debt which is a very good sign for the company.

Cash Ratio

Cash Ratio shows the firms cash in hand against its current liabilities. It is measured by,

Cash Ratio = Cash/Current liabilities

Cash Ratio

0.26
0.22
0.20

2016 2017 2018

Apple experienced a bit of turbulence in cash ratio. It was .26 in 2016 but was lower down to .
20 in 2017 and catch up a higher trend in 2018 to.22. Although the cash reserve of Apple was
pretty much stable but the higher trend in total liabilities was to blame much for the
turbulence. Due to the prevailing trend of Apple’s changed capital structure, apple is taking
more debt to repurchase their shares in the market which will prove good for Apple in the long
run.
Inventory Turnover

Inventory turnover commonly measures the activity, or liquidity, of a firm’s inventory. It is

calculated as

Inventory turnover = Cost of goods sold/ Inventory

Inventory Turnover Ratio

61.62

41.39

29.05

2016 2017 2018

Apple Inventory turnover ratio experience much turbulence in this period. But the prevailing
trend is much more pleasing as the figure seemed to be declining over the years. The cost of
goods sold for the company was increasing as usual but the inventory was turbulent throughout
the period which contributed mostly to the whole ratio’s up and down. Apple’s smart inventory
management actually racing the inventory turnover ratio down throughout the years.

Days Sales in Inventory: The days sales of inventory (DSI) is a financial ratio that
indicates the average time in days that a company takes to turn its inventory, including goods
that are a work in progress, into sales.

Formula: Inventory/ COGS/365

 Days Sales in Inventor y
12.56

8.82

5.92

2016 2017 2018

Days sales in Inventory of Apple appeared to experienced some ups and down throughout the
years. Initially It was 5.92 in 2016 but it went up to 12.56 drastically in 2017; meanwhile in 2018
it went down to 8.82. The figure was efficient in 2016 but throughout the period it went on to
be inefficient.

Accounts Receivable Turnover Ratio: The accounts receivable turnover ratio is an

accounting measure used to quantify a company's effectiveness in collecting its receivables or
money owed by clients. The ratio shows how well a company uses and manages the credit it
extends to customers and how quickly that short-term debt is collected or is paid. The
receivables turnover ratio is also called the accounts receivable turnover ratio.

Formula: Net Sales / Average Account Receivable

 A ccounts R eceivable Tur over Rati o
7.36
6.43

5.42

2016 2017 2018

The account receivable turnover ratio of Apple does not seem very comforting as the ratio was
racing downward. It was 7.36 days in 2016, which came down to 6.43 days in 2017: and again in
2018, it came down to 5.42 days. Apple’s account receivable turnover ratio was not very
efficient compared as in 2018 compared to 2016.

Average Collection Period: The average collection period, or average age of accounts
receivables, is useful in evaluating credit and collection policies. It is arrived at by dividing the
average daily sales into the account’s receivables balance.

Average collection period = Accounts Receivables/ (Annual Sales / 365)

 A ver age Collecti on Per iod

67.33

56.80
49.59

2016 2017 2018

The average collection period of Apple was not very pleasing too. As the average collection
period was going up and up years after year. It took the surge from 49.59 days to 67.33 days
throughout the years. The ratio took a downward turn as Apple was offering its product on easy
interest installment offers and people were buying more and more of it on easier terms. It also
meant Apple was taking more and more time to collect it’s due from the customers.

Accounts Payable Turnover: Accounts payable turnover is a ratio that measures the

speed with which a company pays its suppliers. 

Accounts payable turnover ratio= Total Purchases/ Accounts Payable

 A ccounts Payable Tur nover
3.45

3.00
2.89

2016 2017 2018

Apple was not very efficient in paying its short-term obligation as it showed am decreasing
figure. Apple was taking more and more time to payback it’s debtors. which is not a good sign
of company’s profitability.

Average Payment Period: Average payment period means the average period taken by
the company in making payments to its creditors. It is computed by dividing the number of
working days in a year by creditors turnover ratio.

Formula: Average Accounts Payable/ Total Credit Purchase/365

 A ver age Paym ent Per iod
126.12
121.63

105.81

2016 2017 2018

Again, the average payment period of Apple was increasing which means they are taking more
and more time to payback their short-term debtor. It could be an alarming sign for Apple as the
supplier could back -off for late payment but thanks to the name and fame of Apple in the
industry which is allowing them dictate terms on suppliers. And it is buying time for Apple to
make payments.

Net Working Capital Turnover: Working capital turnover is a ratio that measures
how efficiently a company is using its working capital to support a given level of sales. Also
referred to as net sales to working capital, work capital turnover shows the relationship
between the funds used to finance a company's operations and the revenues a company
generates as a result.

Formula: Net Annual Sales/ Average Working Capital

 Net Wor king Capital Tur nover
18.35

7.74 8.24

2016 2017 2018

Apple has a Net Working capital turnover upward trend. As one of the market leaders of the
industry, Apple always has a burgeoning sale. To sustain such level of sales, they must have a
efficient working capital system. From 2016 to 2018 the net working capital turnover figure for
Apple went more then just double. That qualifies as good sign for Apple.

Total Asset Turnover

The asset turnover ratio measures the value of a company's sales or revenues relative to the
value of its assets. The asset turnover ratio can be used as an indicator of the efficiency with
which a company is using its assets to generate revenue.

Total Asset Turnover = Sales/ Total Assets

 Total Asset Turnover
0.73

0.67

0.61

2016 2017 2018

The total asset turnover ratio of Apple experienced some ups and downs, though it had an
upward trend. In 2016, it was .67 but went down a bit in 2017 as the total asset surged up; in
2018 the figure went up to .73. It meant Apple sold .73 USD taka against 1 USD of total asset.
Apple is using up its asset efficiently to generate sales.

Fixed Asset Turnover: The fixed asset turnover ratio is, in general, used by analysts to
measure operating performance. This efficiency ratio compares net sales to fixed assets and
measures a company's ability to generate net sales from its fixed-asset investments,
namely property. 
Formula: Net Sales/ Averaged Fixed Asset
 Fixed A s s et Tur nover
1.13
1.00
0.93

2016 2017 2018

The fixed asset turnover ratio for Apple was pretty stable unlike just 2017. In that particular
year, they brought some long-term securities of extraordinary amount. For that reason the
figure in 2017 was a little bit down as .93. But next year they made it up to look the figure like
1.13. That means Apple was generating 1.13 USD of sale against 1 USD of fixed asset in that
year.