Running Head: FINANCIAL RATIOS 1 FINANCIAL RATIOS 5 FINANCIAL RATIOS Shawn Harden Southern Wesleyan University Managerial Finance Apple Financial Analysis On this assignment, we cover the financial analysis of Apple incorporated company. The analysis is done by the use of financial ratios. Apple is a company that provides the customer with various products such as mobile phones, tablets, laptops, software and other music digital players. The company is based in the United States but has customer all over the world. The company is among the best in the industry. Liquidity Ratios 2014 2015 Current Ratio 1.08 1.11 Quick Ratio 0.86 0.98 Liquidity ratios are ratios that are used to determine the ability of a company to pay back its liabilities. The liquidity of the company can be determined by using current ratios and quick ratios. The current ratio is determined by making a comparison of current assets to current liabilities. This ratio is meant to determine the liquidity and efficiency of the company. The ratios of the company show that the company can comfortably pay its outstanding debt using its current assets. The company therefore has a big margin and can therefore be able to pay the debt and any more debt. The company has a good liquidity due to the fact that their sales have increased which makes the liquid cash increase to and the current assets to also increase (Titman, Keown & Martin, 2015). Quick ratio determines the liquidity of the company using the most liquid assets that it has. The most liquid assets in this case are cash and cash equivalents. The two ratios above show that the company cannot be able to pay all of its debts using the most liquid assets. The company can therefore not be able to pay of all its debts in case of a situation where it should be paid within a short period of time. The company however has a better quick ratio in comparison to the industry’s average. The quick ratio improved from 2014 to 2015 due to the fact that the company had an increase in its sales thus an increase in accounts receivable and cash. Asset turnover ratios 2014 2015 Inventory Turnover 53.2 59.6 Collection Period 34.9 26.3 Asset turnover ratio draws a comparison between the company’s revenues and the company’s assets. The asset turnover ratio is used to determine the efficiency of the company in using its assets to generate revenues. Inventory turnover determines the number of times the company consumes all of its inventory and replaces it within an accounting period. The company had high numbers of inventory turnover. This therefore shows that the company has low costs for storage since they take the company take low levels of inventory at a time. This shows that the company has an efficiency in the way it uses its assets. The company buys low level of inventory so that the company has more cash left to carry out other investments. The level of asset turnover is good if the company does not a ...