hewet eBerifits HomeAgainPost 1ndeedUSAOBS Tatitlek Central

hewet eBerifits ? HomeAgain-Post 1ndeed?USAOBS Tatitlek Central Applicant Set Unit 4 Assignment: Finance and Operations Assignment Finance and Operations This week we look at finance and operations, and apply a bit of quantitative analysis to the effort Your assignment is to analyze current financial ratios for a given business APA formatting is required (no abstract required) 1. Think of a specific business you find interesting, i.e. Apple, UTC, Southwest Airlines, etc. 2 Search the web for that business \"Financial Statement (You will find many hits for the data ) 3. Select the http:/www mormingstar com site offering your company\'s financial statement. 4. You will now see a number of financial ratios for your company. Below is an example for Apple: http:/ifinancials momingstar.comratios/t html? AAPL 5. Now, define the following ratios, note the ratio for your business, and explain what the ratio means for the business moving forward a) Return on Assets b) Return on Equity c) Return on Capital dj Gross Margin e) SG&A; Margin f Current Ratio g) Quick Ratio h) Total Debt/Equity iI) Total Revenue D Gross Profit

Solution

In the above analysis of Ratio, The company Apple has been chosen and the ratios of 2017 has been considered.

a)	Return on assets	Return on assets is an indicator which shows how profitable the company is in relation to its overall assets available
	Formula	Net Income/Total assets	13.87%	The return on assets ratio of the company has reduced from the previous year which shows the efficiency of the use of the assets
b)	Return on Equity	This ratio tells about how much profits the company generates with the money the shareholder\'s have invested
	Formula	Net Income/Total Equity	36.87%	There has been marginal drop in the return on equity of Apple as compared to previous years
c)	Return on capital	This ratio measures a company\'s profitability and the efficiency with which its capital is employed
	Formula	Earnings Before Interest and Tax/Capital Employed	19.86%	The return on capital employed of Apple has reduced from 21.95% to 19.86% in 2017
d)	Gross Margin	This ratio tells the percent of total sales revenue the company retains after incurring the direct expenses
	Formula	Gross Margin/Sales	38.47%	The Gross margin of the company has reduced from 39.08% to 38.47% in 2017
e)	SG&A Margin	This Ratio tells the percentage of selling, general and administrative expenses related to total sales
	Formula	Selling, General and administrative expenses/Sales	6.66	There has been increase in the SG&A margin of the company as compared to prevous years
f)	Current Ratio	This ratio tells about the liquidity or solvency position of the company that is whether the company will be able to pay off its current liabilities with the current assets available
	Formula	Current Assets/Current Liabilities	1.28	As compared to 2016 the current ratio has decreased from 1.35 to 1.28 in 2017
g)	Quick Ratio	This ratio shows the solvency position if inventory is deducted from current assets
	Formula	(Current assets-inventory)/Current Liabilities	1.09	The Quick ratio has reduced from 1.22 in 2016 to 1.09 in 2017
h)	Total Debt/Equity	This ratio shows the proportion of debt equity of the company in the capital structure
	Formula	Total Debt/Total Equity	0.73	The Debt equity ratio of the company has increased from 0.59 to 0.73 in 2017
i)	Total Revenue	Revenue ratio also known as profit margin ratio which shows the percentage of return on sales after meeting all the expenses
	Formula	Net Income/Sales	21.09%	The net margin ratio has slighted dropped from 21.19 to 21.09% in 2017
j)	Gross Profit	This ratio tells the percent of total sales revenue the company retains after incurring the direct expenses
	Formula	Gross Margin/Sales	38.47%	The Gross margin of the company has reduced from 39.08% to 38.47% in 2017