Financial comparison

1. Part III Mid-Term Project
Student Name
Institution Affiliation
Technology Sector Ration Analysis
Professor’s Name
Due Date

2. Introduction
◦ The companies I picked for comparison were
MSFT and AAPL.
◦ The companies belong to the software
infrastructure industry.
◦ The companies have dominated the technology
sector for a long time.
◦ I used valuation, profitability and financial health
metrics to evaluate the two companies.

3. Profitability
◦ The technology sector is highly profitable with
high profit margins.
◦ OM and NM were reducing for AAPL while
increasing for MSFT.
◦ ROE and ROIC are high and increases steadily for
AAPL and fluctuates for MSFT.
◦ Overall, AAPL has higher profitability ratios
especially ROE and ROIC, which makes it a sound
investment.

4. Financial Health
◦ The sector is characterized by moderately high risk and
leverage.
◦ Both companies are in a better liquidity position but
MSFT is better than AAPL stock.
◦ In terms of leverage, AAPL has higher ratios than MSFT
◦ Therefore, AAPL uses a lot of debt in its operations.
◦ Overall, MSFT has a better leverage and liquidity
position, while Apple is the riskiest company.

5. Valuation
◦ Microsoft is highly valued (overvalued) due to its
higher P/B, P/S, P/E and P/CF ratios.
◦ Compared to Microsoft, Apple is slightly
undervalued.
◦ Therefore, investors prefer an undervalued
stock, since it has the potential to rise.
◦ With a 100 percent allocation, I will consider
investing in AAPL (70%) and 30% for MSFT