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Financial Ratio Analysis Report

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Running head: FINANCIAL RATIO ANALYSIS REPORT

Financial Ratio Analysis Report

University of Phoenix

FIN/540

Due: March 5, 2012

According to First Research, "US shipments of personal computers (PCs) account for roughly 20 percent of the worldwide market. Hewlett-Packard (HP), Dell, Apple, and the US-based subsidiaries of Acer and Toshiba are the largest US PC vendors" (First Research, 2011). The PC market is competitive and manufacturers operate on slim margins. Cash flow for the industry is somewhat seasonal due to the buying patterns of both the consumer and business markets. Higher sales are typically seen during the third and fourth quarter (back-to-school and holiday season, respectively). The PC market is "driven by technological advances, disposable income in the consumer market and corporate spending cycles" (First Research, 2011).

Apple, Inc. was incorporated n January 1977, in California. As of September 24, 2011, Apple and its wholly-owned subsidiaries designs, manufactures, and markets mobile communication and media devices, personal computers, and portable digital music players and sells a range of related software, services, peripherals, networking applications, and third-party digital content and applications" (Mergent online - Apple, 2012, p. 1). Apple, Inc. is listed on the stock exchange and ticker as AAPL. Apple has approximately 60,400 full-time employees.

Dell Inc, was incorporated in May 1984, in Texas. As of September 24, 2011, Apple is a holding company that provides a range of technology product categories through its subsidiaries. The products range from mobility products to desktop computers, to software. (Mergent online - Dell, 2012, p. 1). Dell, Inc. is listed on the stock exchange and ticker as NMS: DELL. Apple has approximately 100,300 full-time employees.

Information was obtained for Apple Inc. and Dell Inc, which are Fortune 500 companies, to complete a Financial Ratio Analysis Report that consists of a chart with a 3 year trend table analyzing 12 financial ratios that are important to Apple and Dell, Inc. Each ratio is discussed in a comparison of both companies. The strengths and weaknesses of the companies are discussed as well as the financial condition and health of the companies. Through my analysis I will determine if the shareholders are receiving accurate information, pursuant to the Sarbanes-Oxley Act, 2002. Identification of any threats or potential problems will be assessed. New management initiatives will be reviewed to determine the viability of same. Finally, this paper will determine if the company is financially prepared for such new endeavor - financially and non-financially.

APPLE, INC.

Profitability Ratios 06/30/2011 06/30/2010 06/30/2009

ROA - Return on Assets 27.14 21.78 12.24

ROE - Return on Equity 41.79 37.16 23.41

ROI (Return on investment) 54.47 48.76 31.43

EBITA 33.27 29.52 22.66

Calculated Tax Rate 24.22 24.42 28.56

Liquidity Ratios 06/30/2011 06/30/2010 06/30/2009

Current ratio 1.61 2.01 1.88

Debt Management 06/30/2011 06/30/2010 06/30/2009

Total Debt to Equity - - -

Asset Management 06/30/2011 06/30/2010 06/30/2009

Total Asset Turnover 1.13 1.01 0.78

Receivables Turnover 10.03 8.73 7.51

Inventory Turnover 70.53 52.51 48.54

Accounts Payable Turnover 8.15 7.43 6.59

Property Plant & Equipment Turnover 17.31 16.94 13.55

Per Share 06/30/2011 06/30/2010 06/30/2009

Cash Flow per Share 40.72 20.5 11.41

DELL, INC.

Profitability Ratios

06/30/2011 06/30/2010 06/30/2009

ROA - Return on Assets 7.31 4.78 9.19

ROE - Return on Equity 39.42 28.99 61.35

ROI (Return on investment) 29.32 27.22 59.8

EBITA 6.61 5.61 6.65

Calculated Tax Rate 21.34 29.2 25.45

Liquidity Ratios 06/30/2011 06/30/2010 06/30/2009

Current ratio 1.49 1.28 1.36

Debt Management 06/30/2011 06/30/2010 06/30/2009

Total Debt to Equity .77 .72 .47

Asset Management 06/30/2011 06/30/2010 06/30/2009

Total Asset Turnover 1.71 1.76 2.27

Receivables Turnover 6.6 7.08 8.67

Inventory Turnover 42.6 45.51 48.99

Accounts Payable Turnover 5.44 5.39 6.19

Property Plant & Equipment Turnover 29.83 23.8 24.78

Per Share 06/30/2011 06/30/2010 06/30/2009

Cash Flow per Share 2.05 2 .96

INDUSTRY MEDIAN

Profitability Ratios

ROA - Return on Assets 8.2

ROE - Return on Equity 16.6

ROI (Return on investment) 3.7

EBITA

Calculated Tax Rate

Liquidity Ratios

Current ratio 1.7

Debt Management

Total Debt to Equity 85.4

Asset Management

Total Asset Turnover 34.1

Receivables Turnover 56.4

Inventory Turnover 34.1

Accounts Payable Turnover 4.7

Property Plant & Equipment Turnover

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