You will prepare and submit a term paper on Ratio analysis. Your paper should be a minimum of 2500 words in length. 1

You will prepare and submit a term paper on Ratio analysis. Your paper should be a minimum of 2500 words in length. The former is used to compare the performance of the firm within itself in terms of aspects such as improvement in management skills and finance handling. The latter is used to compare the performance of the firm within its industry of operation. Such comparisons will consider fundamental aspects of operations like profitability. In profitability, an increase or decrease is established and the causes of each including what can be done to stabilize profitability and grow it further. The liquidity of the firm is also quite fundamental as this would enable management know how to plan operations and sources of financing. Therefore, ratio analysis is used in the determination of trends as it strives to expose the strengths and weaknesses of the company. Ratios can be either favorable or unfavorable depending on whether the increase or decrease is in the desired direction (Dess 2012). For our analysis of Apple Incorporation’s financial statement of the year 2012 compared to that of the year 2011, we will categorize ratios into the following – Profitability Ratios. Liquidity ratios. Efficiency Ratios and Capital structure ratios. Profitability Ratios They measure the ability of the company to generate profits from their asset investments. Such ratios include- Gross Profit margin, which is the profit before expenses generated by sales as a percentage. There is the Net Profit margin which are the earnings before depreciation and tax generated by sales. Then there is the Return on Equity(ROE)/Net Worth/ Shareholders funds/ Investments(ROI), this is the ratio of the earnings after tax plus preference dividends contributed by share capital and reserves. The fourth ration in this category is the Return on total assets (ROTA) which indicates how much the Fixed and Current Assets of a company contributes to the Earnings before Interest and Tax (EBIT). Return on Capital Employed is the next, it indicates how equity and Fixed interest capital contributes to the EBIT, and finally we have the Operating Expenses Ratio indicating the percentage of sales consumed by the operating expenses. An increase in these ratios from the previous period is considered favorable while a decrease in the last ratio is considered favorable. The ratios as shown by the financial data by Apple incorporation between the years 2011 and 2012 financial statements are as shown in the table below. RATIO FORMULA YEAR 2012($ in Millions) YEAR 2011($ in Millions) 1. Gross Profit Margin = (Gross Profit/Sales)*100 (66,662/156,508)*100 = 43.87% (43,818/108,249)*100 = 40.48% 2. Net Profit Margin =(EBIT/Sales)*100 (55,241/156,508)*100 = 35.30% (34,790/108,249)*100 = 32.14% 3. ROE/ROI =(EAT+ Pref. dividends/Owner’s Equity)*100 (41,733/118,210)*100 = 35.30% (25,922/76,615)*100 = 33.83% 4. ROTA =(EBIT/Total Assets)*100 (55,241/176,064)*100 = 31.38% (34,790/116,371)*100 = 29.90% 5. ROCE =(EBIT/Total Capital Employed)*100 (55,241/118,210)*100 = 46.73% (34,790/76,615)*100 = 45.41% 6. Operating Expenses Ratio =(Operating Expenses/Sales)*100 (13,421/156,508)*100 = 80.58% (10,028/108,249)*100 = 9.26% As indicated by the profitability ratios, there was a general increase in profitability of Apple Inc between the year 2011 and 2012. The gross profit margin shows a rise from 40.48% in 2011 to 43.87% in 2012. Such an increase was because of the increase in. sales from 108,249 in 2011 to 156,508 in 2012. An increase of the net profit margin from 32.14% to 35.

Show more

Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10