io of stockholders\' equity to total assets; price-earnings ratio is a technol A

Question

io of stockholders' equity to total assets; price-earnings ratio is a technol A8 ka technology company that designs, produces, and sells a variety of digial devices, Aople ing the iPod, iPhone, and iPad. The following data (in millions) were adapted from a ecent financial statement of Apple. Obj 9 Year 1 $116371 39,756 76,615 28.05 Year 2 Total assets Total liabilities Total stockholders' equity Earnings per share $176,064 57,854 18,210 44.64 . Compute the ratio of liabilities to total assets for Years 1 and 2. Round to one decimal place

Explanation / Answer

Year 2 Year 1 Total Assets               176,064               116,371 Total Liabilities                  57,854                  39,756 Total Stockholder Equity               118,210                  76,615 earning Per share                    44.64                    28.05 Solution 1 Liability to Assets =57854/176064 =39756/116371 32.86% 34.16% Solution 2 Stake holder equity =1-32.86% =1-34.16% 67.14% 65.84% Solution 3 Liability to Equity =57854/118210 =39756/76615 48.94% 51.89% Solution 4 Since Debt ratio in both years is around 33%, we can say that the operations are primarily financed with Equity Solution 5 Since the debt to asset is reduced in year 2. It means creditors will have more coverage this year so they will feel safer Solution 6 Price earning ratio= Price/Earning per share =444.38/44.64 =459.68/28.05 PE ratio=                      9.95                    16.39 Share is trading on trade multiple of 16 in year which is reduced in year 2 which signifies the loss of investor apetite for this share.

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