Apple Ratios

AAPL For the 2012 and 2011 fiscal years, Apple had the following ratios (based on FY end, where applicable): Apple Current Ratio Total Asset Turn D/E Net Margin ROA ROE EPS P/E Dividend yield Payout ratio P/Book Based on these figures, Apple was in good financial shape. It should be noted that these figures are somewhat skewed, particularly the current ratio. Apple actually had billions in cash that was locked up in long-term investments on the balance sheet.

These did not show as current assets, but could easily have been converted to current assets is the company needed the money. So the current ratio was actually quite a bit higher than the official figure shown here. There were $55.6 billion in LTI for FY2011, and $92.1 billion for FY12, which clearly would make a difference to the liquidity calculation. The company earns fairly healthy margins, and its EPS is rather spectacular, two things that investors look for.

It is worth noting that despite Apple's strong growth, the company maintained a relatively low P/E ratio. Part of this is because the company was dominating its markets, so it would need to open up new markets in order to grow, and partly this was the impact of those long-term investments, where were typically low interest Treasuries and bonds. Earning an inferior return for the company, this cash generate controversy, with activist investors seeking the return of this capital to shareholders (Worstall, 2013), something Apple has begun to do.

If we look at Apple from the perspective of the Dupont analysis, the ROA is a component of profit margin, asset turnover and leverage). All of these contribute to the company's returns. The asset turnover is probably the weakest link, something that is attributed in large part to the well over $100 billion that Apple is not investing in its business. That cash is basically on the sidelines, on the balance sheet as an asset but not earning any money for Apple.

The leverage and profit margins are fine -- Apple earns on what it does sell, and the ROA is not a function of being too highly leveraged at all. It is worth noting that the ROA did not change much between the two years. A slightly higher degree of leverage in 2012 can be attributed as the cause of the slight bump in ROA, though the profit margin also increased during 2012. Asset turnover was lower because Apple had more of its balance sheet in cash on the sidelines.

In the coming years, it should get more on its asset turnover, which should prop up the ROA a little bit more. 7.18.