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Executive Summary

This summary is based on the financial plan of Apple Company of USA. Apple Company creates, produces, and sells mobile music streaming recorders, desktop computers, smartphones, and entertainment devices, as well as a broad range of related software solutions. Apple’s new its products around the globe through its direct selling, department shops, online shops, and online marketplaces.  The main purpose of this company is to develop goods that improve real people’s lives. That entails consistently inventing both within existing product categories as well as creating wholly new ones, like the iPhone as well as the Apple Watch.

Therefore, the main motive of this report is to analyze the financial statement to determine the sales or revenue of the company through research. The key analysis point is to identify the ratios, breakeven analysis, and suitable source of finance i.e. debt or equity. In the end, it is justified that the evaluation of company health and wellness and gives insight into how it runs its operations

Table of Contents

Executive Summary: 1

  1. Introduction: 3
  2. Description: 4

2.1. Financial Ratios: 4

2.2. Financial Projections: 5

2.3. Break-even analysis: 7

2.4. Appropriate main sources of finance: 9

2.5. Justification of debt financing: 10

  1. Conclusion: 11

References : 12




1. Introduction

This report is based on the Apple USA company. Over the past 33 years, it has stayed true to its financial and design approach and has been able to establish itself as a cult brand that is renowned all over the country for its cutting-edge business practices. A financial ratio that provides a thorough examination of the financial performance and its impacts on the firm comes second in the thoughtful examination of Apple’s income report, which also contains a broad comparison of the company’s primary financial affecting elements.

In this report, they prepare the financial report including ratios with calculations, and show how Apple Company runs its business. With the annual report for 2022, the financial projections and break-even analysis are prepared by taking some suitable assumptions. For running its business, the company wants to increase its capital structure through debt financing and it is preferred because they want to recover its short-term liabilities and expand its business. In the end, they conclude the activities, competitiveness, and net earnings of Apple Company which are disclosed in an income report on the company’s financial position.

2. Description

2.1. Financial Ratios

The revenues, gross margin, net earnings, price of sales, and profits per unit are the primary determinants of Apple’s accounting records. These metrics reflect the business’s overall financial success. The analysis of ratios are:

2.1.1. Profitability Ratios:

  • Net Profit ratio : Revenue –Cost / Revenue *100

=    82959 – 54719 / 82959*100

=     28240 / 82959

=       0.34*100

=        34 percent

  • Operating ratio : O.E. + COGS /net sales

= 67299 +54719 / 82959

=122018 / 82959

= 1.47:1

In the case of the Profitability Ratio, it is determined how much money a business makes relative to the expenditures and expenses it incurs in a given fiscal year. An Apple business is functioning successfully when its profitability ratio becomes more valuable. To emulate, it analyses the two ratios i.e. Net profit as well as an operating ratio. Apple has increased its retail section to invest in its marketable securities, which accounts for the increase in Net Profit i.e. it can successfully manage its expenditures and/or sell goods or services for a price that is much greater than its expenses. The Operating Ratio is declining day by day because this company provides wearable, gadgets, applications, tablets, laptops, and cellphones. Apple’s primary product and source of income in the case of Apple business. Therefore, the operating ratio shows a positive sign in this business (Chen & Gong, (2021), p5 (1)).

2.1.2. Liquidity Ratios:

  • Current Ratio : Current Asset / Current Liabilities

= 118180 / 129873

= 0.9: 1

  • Cash ratio : Cash and cash equivalent / Current Liabilities

= 13800 / 129873

= 0.10: 1

The amount of cash that a corporation can get from one’s assets over the following twelve months can be calculated using a liquidity position. The current ratio, as well as the cash ratio, are the 2 ratios that are used together. In this case, the current ratio is reducing due to an upsurge in short-term liabilities as well as reducing in the current asset as per the annual report of 2022 (Rashid, (2018),p3(1)). That’s, why, this company cannot achieve the ideal ratio. Due to this, cash and cash equivalent are also affected. Hence, the overall decline in both ratios in the Finance Year 2022 can be attributed to the company’s liabilities arising as a result of R&D investments, manufacturing, and retail stores.

2.1.3. Debt ratios:

  • DEBT Ratio : Total debt / Total Asset

= 283263 / 350662

= 0.8:1

In Apple Company, they ascertain how much of a company’s assets are financed by debt, the debt ratio is a monetary measure used in accounting. The proportion of assets that are financed by debts is expressed by the debt ratio (Delen& Uyar, (2013), p8 (1)). Apple has no long-term debt but only short-term obligations. As per the annual report for 2022, the debt ratio is still stable because this company uses debt financing. Therefore, the company advises higher creditworthiness.

2.1.4. Asset activity Ratio:

Average Inventory: 8398

  • Asset Activity Ratio : COGS / Average inventory

= 54719 / 8398

= 6.5:1

A financial indicator called an activities ratio shows how effectively a business is using the cash and cash equivalents to produce revenue and money. In this case, the company tried to increase their asset to cover their expenses (Al Mheiri& Saif, (2021), p7 (1)).

2.2. Financial Projections

Financial forecasts forecast the future revenue and expenditures of their APPLE Company using actual or estimated accounting transactions. They frequently incorporate many possibilities to help them to understand whether alterations to one area of their business (such as increased sales or decreased operating costs) might impact their success.

A series of financial statements is essentially what a financial prediction is. Upcoming costs and revenues will be predicted by these statements. Any prediction typically takes into account business financial statement, general income, and outflows and inflows of cash Because the company intends to develop a variety of services and goods to meet consumers’ requests in marketplaces throughout the world and because they may adjust to these fluctuating market conditions, these fundamental assumptions must be made (Johnson& Trinh, (2012),p3(1)).

The assumptions of financial projections in Apple Company are:

  • It should be projected sales numbers that are in-depth
  • cost of sales
  • General administrative costs as well as others.
  • Predicted the balance sheet , cash flow statement and income statement
  • Production cost are required to be forecasted. Its study and precise estimation of the expenses of all the components that go into their manufacturing costs define the manufacturing cost of the product.


  • Balance sheet :
Particulars Amount
Total current asset 118180
Cash and short term investment 48231
Cash 14298
cash and equivalent 13800
short term investment 23413
Trade receivables 45400
Total inventory 5460
Other current asset 16386
Total asset 350662
Account payable 52686
short term debt 6999
capital lease 9659
other current liabilities 56539
long term debt 94700
capital lease obligations 769
other liabilities 42647
Total liabilities 283263
Total equity 58107
Total liabilities&shareholders’ equity 336309
Total common shares outstanding 16095.38


  • Income statement :
particulars Amount
Revenue 82959
cost of revenue 54719
Gross profit 42559
Selling /general admin.expenses 6193
Research and development 6387
Depreciation 2805
Other operating expense -2805
Total Operating expense 67299
Operating Income 29979
Interest income 9
Others 10
net income before tax 23066
provision for income tax 3624
Net income after tax 19442
Diluted weighted average share 16262
Diluted EPS 1.52
DPS 0.22


  • Cash Flow statement :
Cash flow statement of Apple
Net income 19442
Cash flow from operating activities 22892
Depreciation 5434
deferred tax 1668
Non-cash items 4497
cash taxes paid 9301
cash interest paid 1406
change in working capital 4473
Cash flow from investing activities -25371
Capital expenditures -5317
Other investing cash flow items -20054
Cash flow from financing activities -56510
Financing cash flow items -43
Total cash dividend paid -3811
Insurance of stock -43109
issuance of debt -971
net change in cash -6749


2.3. Break-even analysis:

  • With the aid of a break-even assessment, the Apple Company may compute the point at which their business, services, or item will become profitable. It is a financial computation used to figure out how many goods or services a business needs to produce to recoup expenses, particularly fixed and variable costs. The break-even analysis includes the three factors i.e.
  • Fixed costs, often known as overhead expenses, are expenses that don’t change regardless of how much an Apple company is offering. They consist of rent, taxes, wages and salaries bills, and utility (Jin, (2020), p9 (2)).
  • Dynamic expenses: Variable expenses depend on a company’s sales. They might also consist of extra work performed by contract employees, supplies, and transaction costs.
  • Standard cost: this is the typical price that would cost for their services and goods.

The Apple Company decide on their selling pricing, create a sales revenue, and develop their company strategy with the aid of their point of separation. Even if their company makes a lot of money the managers can determine their profitable product lines by calculating their endpoint.

Based on the business context of the APPLE Company, the assumptions are:

  • All production levels have a similar total fixed price.
  • Whether operating costs or indirect cost can indeed be applied to every expense.
  • Revenue and expenses behavior that is linear.
  • The unit sales price is stable all throughout current output.
  • The company exclusively makes one kind of item and maintains a consistent product mix.
  • There at beginning and the conclusion of an income statement, the stock is unchanged.
  • Only the number of transactions has an impact on expenses and sales revenue.
  • That’s because the increase in the total costs is thought to be proportional to the production level, the variable cost per unit cost remains unchanged.
  • Some other elements, including such productivity, effectiveness, and innovation, remain constant (Bergvall-Kåreborn& Howcroft, (2013), p5 (2)).

Break-even point of the APPLE Company:

The Apple iPhone’s break-even analysis is as follows: Fixed cost / (Selling price –Variable cost)

With a $250 variable cost per cellphone and a $50 million fixed price, the wholesale income per phone is $500. Using these figures, the computation for the break-even point would indeed be $50 million divided by $500 less $250. That’s equals 200,000 sold units. Apple will therefore reach break-even after 200,000 iPhones are sold.



2.4. Appropriate main sources of finance:

Based on the analysis of ratios, it is identified that the Apple Company suffered from short-term liabilities and recover only from debt financing.  The main appropriate source of finance for this company is debt financing. Therefore, the apple company up surging its capital structure by influencing debt financing.

In debt finance, money is borrowed and then repaid with interests. A loan is probably the most typical type of debt financing. When a corporation receives debt funding, there may be constraints placed on its operations that restrict it from seizing possibilities outside of its core business. There are many benefits to debt finance as the lender does not influence their company. Their connection with the financier is terminated once they have repaid the debt. The amount that they pay is furthermore tax deductible. Therefore, the mortgage repayments are constant, expenses are simple to predict in Apple Business (Zhang, (2022), p4 (2)).

Requirement for financial Projections:

  • Assemble their previous financial statement
  • Collect the past finance in order to maintain their statement of income, cash flow and balance sheet.
  • Need to estimate the sales revenue
  • Prepared and schedule the account payable
  • Prepare a receivable collection proposal


–         It aids in the creation of business strategies by assisting them in creating a business plan that is geared toward the expansion of their enterprise. It enables users to arrange their resources and spend their own money sensibly to minimize hazards.

–         Better financial management i.e. one of the key considerations for managing cash for running the Apple business. They can arrange their funds for different operations with the use of measuring finances. It enables companies to reduce wasteful spending and increase investment in productive areas of their company.

–         Business statements on a scale can use to project the company’s future revenue. They can also expand their performance to fulfill the company’s objectives by using it to assist the benchmarks.


  • Imbalances in predictive modelling as well as a lack of reliable data as manyof the forecasts have problems with trustworthiness, ranging from missing data to disconnected data within the projection. The prediction frequently falls short of accurately describing the direction that the firm is going.
  • Difficulties with operational data i.e. the Problems will develop during reporting and analysis when it’s important to use operational data to gain understanding. Whenever a business issue needs to be resolved, the data is often either not in an accessible format or is difficult to examine.


Financial Projections are a good fit for Apple Company since they help clients decide whether to actually invest and when they would need finance. They assist AppleCompany with modifying prices, operations planning, and cash flow management. The qualifications are:

  • Arrange sales and purchases in advance.
  • The computations listed below should be performed.
  • Determine their financial needs.
  • Assist to focus on the cash flow or change in production plans.

2.5. Justification of debt financing:

Based on the analysis, if the company would expand its business, Apple Company would be better off going for debt financing because debt is a far less expensive type of funding than equity. The first factor is that equity carries a higher risk than debt. Common shareholders often demand a specific rate of return because a corporation is not required by law to distribute dividends to them. So, because business is required by law to repay the debt, a budget deficit presents a substantially lower risk to investors (Javaid, (2016), p5 (2)).

Therefore, it would make sense for an Apple company to be entirely backed by stock. It’s too effective. Because it is less expensive, debt enables equity investors to get a bigger return on their investment.




3. Conclusion:

This is to conclude that financial statements play a vital role in Apple’s business because they express the important details of the activities and financial standing of a company. Financial statements aid businesses in making better choices. They emphasize the business units that have the best return on investment.

The result is also justified, they give them a piece of useful information about revenue, availability, productivity, and another source of finance. They also use these ratios to see how their business has done over a specific amount of time. Therefore, this company preferred debt financing by increasing its leverage and through this, current investors also decided to invest in this company and expand its business.




Al Mheiri, R., Al Hosani, N., & Saif, E. (2021). Ratio Analysis of Apple. Available at SSRN 3895231. Available at,

Bergvall-Kåreborn, B., & Howcroft, D. (2013, December). The Apple business model: Crowdsourcing mobile applications. In Accounting Forum (Vol. 37, No. 4, pp. 280-289). No longer published by Elsevier. Available at,

Chen, X., Liu, Y., & Gong, H. (2021, December). Apple Inc. Strategic Marketing Analysis and Evaluation. In 2021 3rd International Conference on Economic Management and Cultural Industry (ICEMCI 2021) (pp. 3053-3061). Atlantis Press. Available at,

Delen, D., Kuzey, C., & Uyar, A. (2013). Measuring firm performance using financial ratios: A decision tree approach. Expert systems with applications40(10), 3970-3983. Available at,

Javaid, A. (2016). Debt Sustainability Analysis for Companies. Available at SSRN 2746828. Available at,

Jin, Z. (2020, November). The Influence of Dividend Policy on the Company Value–Take Apple Inc for an Example. In 2020 2nd International Conference on Economic Management and Cultural Industry (ICEMCI 2020) (pp. 196-200). Atlantis Press. Available at,

Johnson, K., Li, Y., Phan, H., Singer, J., & Trinh, H. (2012). The Innovative Success that is Apple, Inc.Available at,

Rashid, C. A. (2018). Efficiency of financial ratios analysis for evaluating companies’ liquidity. International Journal of Social Sciences & Educational Studies4(4), 110. Available at ,’_Liquidity/links/5b2a20f30f7e9b1d009bcd54/Efficiency-of-Financial-Ratios-Analysis-for-Evaluating-Companies-Liquidity.pdf

Zhang, X. (2022, July). Analysis of Business Model and Financial Operation: Evidence from Apple. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 455-459). Atlantis Press. Available at,

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