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Курсовик Course Workon discipline Economic AnalysisApple
Тип работы: Курсовик.
Уникальность по antiplagiat.ru: < 30%
1.The theoretical part 3
1.1 The methodology for calculating indicators of economic activity 3
1.2 Vertical Analysis and Horizontal analysis 8
2. The Practice part 10
2.1 General characteristics of the company 10
Corporate culture 11
Customer service 12
Charitable causes 15
2. 2 Analysis of financial rations of the company 16
2.3 Vertical and Horizontal Analysis 21
Attachment A (Apple Annual Balance Sheet) 26
Attachment B (Apple Annual Income Statement) 27
Attachment C (Apple Annual Cash Flow Statement) 28
The list of references: 29
1.The theoretical part
1.1 The methodology for calculating indicators of economic activity
Economic analysis are a valuable and easy way to interpret the numbers found in statements. Ratios can help to answer critical questions such as whether the business is carrying excess debt or inventory, whether customers are paying according to terms, whether the operating expenses are too high and whether company assets are being used properly to generate income.
A good indication of the company’s financial strengths and weaknesses becomes clear when computing financial relationships. Examining these ratios over time provides insight into how effectively the business is being operated.
Many industries compile average industry ratios each year. Average industry ratios offer the small business owner a means of comparing his or her company with others within the same industry and provide yet another measurement of an individual company’s strengths or weaknesses. Today there are many different indicators for the analysis of the enterprises, following are the most critical ratios for most businesses, though there are others that may be computed.
1) Ration of Solvency/Liquidity
· Capital employed
In order to calculate capital employed we require total assets and the current liabilities of a firm.
The capital employed for a firm is equal to the non-current debt and the owner’s equity that is invested in his business. The non-current debt and the equity are the sources of long term financing for the business. Other sources of the capital employed are the short term debts that are also a good source of financing but they remain visible at the end of the balance sheet of that particular year. The formula shows that capital employed involves the total assets of a business. The total assets of the business consist of owner’s equity and capital derived from shares of the company. Total assets of a company also include the fixed assets and the current assets of the company. Another factor included in the total assets of the firm is the gross borrowings of the firm.
Capital Employed = Total Assets - Current Liabilities
· Return on Capital Employed
Return on capital employed or ROCE is a profitability ratio that measures how efficiently a company can generate profits from its capital employed by comparing net operating profit to capital employed. In other words, return on capital employed shows investors how many dollars in profits each dollar of capital employed generates. ROCE is a long-term profitability ratio because it shows how effectively assets are performing while taking into consideration long-term financing. This is why ROCE is a more useful ratio than return on equity < financial-ratios/return-on-equity>to evaluate the longevity of a company.
Capital employed is a fairly convoluted term because it can be used to refer to many different financial ratios. Most often capital employed refers to the total assets of a company less all current liabilities. This could also be looked at as stockholders equity < wiki/Equity> less long-term liabilities. Both equal the same figure.
Return on Capital Employed=Net Operating Profit\Employed Capital
· Net worth
Net worth is an important determinant of the value of a company, considering it is composed primarily of all the money that has been invested since its inception, as well as the retained earnings for the duration of its operation. Net worth can be used to determine creditworthiness because it gives a snapshot of the companys investment history. Also called owners equity, shareholders equity, or net assets.
Net worth=Total assets-Current Liabilities -Long-term Liabilities
· Working capital
The working capital ratio (Current Assets/Current Liabilities) indicates whether a company has enough short term assets to cover its short term debt. Anything below 1 indicates negative W/C (working capital). While anything over 2 means that the company is not investing excess assets. Most believe that a ratio between 1.2 and 2.0 is sufficient. Also known as "net working capital".
Working Capital=Current Assets-Current Liabilities
· Current Ratio
This ratio measures the degree to which current assets cover current liabilities, and is a measure of the financial liquidity, or cash generating ability, of a firm. The higher the ratio, more assurance exists that the retirement of current liabilities can be made. A low current ratio typically means that a company may have difficulty meeting its obligations (debts or liabilities) that are payable over the next year with the assets that it can turn into cash over the next year.
-A ratio >1 shows liquidity. It shows that there is leeway in the current assets available to pay for current liabilities.
-A current ratio of 2 or more generally indicates a strong financial condition.
Current Ratio=Current assets / Current liabilities.
· Quick Ratio (Acid test ratio)
This ratio answers the question "Can this firm meet its current obligations from its liquid assets if suddenly all sales stop?” More stringent than “current ratio,” it excludes inventories (typically the least liquid of current assets) to concentrate on the more liquid assets of the firm.
-Usually an acid test ratio of 1.0 or higher is considered satisfactory by lenders and investors.
-An investor should be wary if the quick ratio is below 0.5, out of line with its industry, and/or showing a declining trend.
Quick Ratio=(Current assets-Inventories) / Current liabilities
· Current Liabilites to Net Worth
This ratio indicates the amount due to creditors within a year as a percentage of owners (or stockholders) capital. In other words, it contrasts the funds that creditors temporarily are risking with the funds permanently invested by the owners. The smaller the net worth and the larger the liabilities, the less security for the creditors.
-As a rule of thumb, should not exceed 60 percent; higher percentages mean significant pressure on future cash flows.
Current Liabilites to Net Worth =Current liabilities/Net worth (%)
· Current Liabilities to Inventories
Indicates reliance on the available inventory for payment of debt.
Current Liabilities to Inventories=Current Liabilities/Inventories (%)
· Fixed Assets to Net Worth
Indicates the extent to which the owners cash is frozen in the form of brick and mortar and machinery, and the extent to which funds are available for the firms operations. A ratio higher than 0.75 indicates possible over-investment and that the firm is vulnerable to unexpected events and changes in the business climate.
Fixed Assets to Net Worth=Fixed Assets/Net Worth (%)
2)Ration of Profitability
· Return on Sales (Profit Margin)
This ratio indicates the level of profit from each dollar of sales, and therefore measures the efficiency of the operation. This ratio can be used as a predictor of the companys ability to withstand changes in prices or market conditions.
Return on Sales (Profit Margin) =Net After Tax Profit (or Net Income) / Annual Net Sales
· Return on Net Worth (Return on Equity)
This is the final measure of profitability to evaluate overall return. This ratio measures return relative to investment in the company. Put another way, Return on Net Worth indicates how well a company leverages the investment in it.
Generally, a relationship of at least 10 percent is regarded as a desirable objective for providing dividends plus funds for future growth.
Return on Equity =Net After Tax Profit (or Net Income) / Net Worth
· ROTA Return on Total Assets (ROTA)
A ratio that measures a companys earnings before interest and taxes (EBIT) against its total net assets. The ratio is considered an indicator of how effectively a company is using its assets to generate earnings before contractual obligations must be paid.
· Return On Equity (ROE)
The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporations profitability by revealing how much profit a company generates with the money shareholders have invested.
Return on Equity = Net Income/Shareholders Equity
Net income is for the full fiscal year (before dividends paid to common stock holders but after dividends to preferred stock.) Shareholders equity does not include preferred shares.
1.2 Vertical Analysis and Horizontal analysis
· Vertical Analysis
Vertical analysis is a financial statement analysis technique in which each line item of a financial statement, usually balance sheet and income statement, is stated as percentage of the base figure of the financial statement. Vertical analysis may also be performed on a cash flow statement. The base figure is total assets in case of balance sheet, ........
The list of references:
1. Open resourse: < >
2. Open resourse: < >
3. Open resourse: stocks/AAPL/balance-sheet/annual
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