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Essay on Capital Structure Analysis Report
Abstract
The purpose of this report is to analyze the capital structure of the Apple Computers in comparison to its competitors and by calculating and mentioning the various liquidity and efficiency ratios to measure the short term and long term performance of the firms and its holdings in perspective of the shareholders.
Introduction
Apple Computer was founded in 1976 by Steve Jobs and Stephen Wozniak and literally began as a garage shop operation. It’s early growth and effects on the PC industry are fabled. In 1984 it launched the Macintosh computer and set the standard for simplicity, performance and ease of use for desktop computers. For the next several years Apple would be the clear leader in the PC market. As the 1990’s emerged, competition on the hardware side from IBM compatible PC’s was becoming much stronger and on the software side Microsoft introduced Windows 3.0 that offered many of the features of Apple’s operating system.
Working Capital Management
Growth Ratios Apple Industry S&P 500
Sales Ratio -1.30 12.00 4.40
EPS (YTD vs. YTD) -89.70 -6.60 30.30
These ratios show a weakness in Apple’s growth rates. Sales ratio is significantly well below Industry average, and somewhat below S&P. The negative EPS ratio denotes a loss in company earnings per share, and therefore is also a sign of negative growth. In addition, Apple’s loss per share is almost 14x greater than that of the Industry average, and 3x greater compared to S&P 500.
Price Ratios Apple Industry S&P 500
Price/Sales 1.21 1.93 1.48
Price/Cash Flow Ratio 60.00 41.30 16.60
Apple’s Price/Sales ratio is lower than industry and S&P, yet only by a small margin. Such a small marginal difference does not indicate a weakness, only a slight shortfall. Apple’s Price/Cash Flow Ratio, however, exceeds that of Industry and S&P which on one hand can be interpreted as a strength because it shows investors are willing to pay more for cash flow....
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