Profitability Ratios (%) 44.46% 42.51% 17.23B Gross Margin EBITD Margin Operatin
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Profitability Ratios (%) 44.46% 42.51% 17.23B Gross Margin EBITD Margin Operating Margin Pretax Margin Effective Tax Rate 38.3 76.388 26.7 27.65 42.51% 23.12% 23.43% 24.25 9.37 22.33% 33,94 2.47% 14 98% Financial Strength 0.83 1.62 53896 56 46% 61.43 Quick Ratio Current Ratio 296 1.37 T Debt to Equity Total Debt to Equity Interest Coverage 46. 96% 53.27% 68.47 1% 120 59% 141.39% 67.76% 79.89 96.03% Valuation Ratio P/E Ratio Price to Sales (P/S) 15.31 17.95 3.83 7.59 748 24.94 23.39 201.01 5.56 16.63 24.37 55.66 59.19 293.81 4.12 5.02 16.77 15.58 28.73 49.11 137 165.69 Price to Tangible Book Price to Cash Flow Price to Free Cash Flow Management Effectiveness (%) Return On Assets Return On Investment Return On Equity 15.07% 19 27% 31.29% 15 93% 20 73% 42.86% 7.16% 9.71% 3.04% 518% Dividends Dividend Yield Payout Ratio 2.5% 27.81 17.2% 0.02 23.17 Revenue/Em Net Income/Em 1.67M 65.28K 16.49 2.01M 454 62K 475.72K 83.17K 341.33K 5.57K 19.96 Receivable Türnover Inventory Turnover Asset Turnover 28.88 0.74 1.86Explanation / Answer
In the given template the analysis is required to be done for Apple and Amazon along with the comparison between the companies as well as the industry.
1. Profitability Ratios: Profitability ratios are the measure of any company's profitability, how much profits the company is making and how its operations are being managed to be cost-effective.
a. Gross Margin: is calculated as gross profit divided by net sales of the company, in the given case the gross margin of Apple is 38.3 which is lower than the industry standard of 44.46% which indicates that the company's cost of goods sold is higher than the industry average. On the other hand, the Amazon and the industry standard are the same at 42.51% and the gross margin is higher in the case of Amazon.
b. EBITD Margin: It indicates the financial strength of the company, the Apple company shows a strong EBITD margin in comparison to Amazon.
c. Operating Margin: This indicates the profit made by a company after paying the variable cost, in the given data the operating margin of Apple id 23.12% whereas that of Amazon is 9.37% which implies the operating cost of Apple is lower to that of Amazon.
d.Pretax Margin: The profitability of the company without taking tax factor into consideration but taking interest and depreciation into consideration.in the given data the pretax margin of Apple is higher than that of Amazon, however, the industry ratios are lower in case of Apple and are on a higher end in case of Amazon.
e. Effective tax rate: The effective tax rate of both Apple and Amazon industry are at a higher rate than the individual companies and both companies are the similar line of the tax rate which is near to 14%.
2. Financial Strength: Indicates the financial and liquidity position of the comapny.
a. Quick Ratio: the Quick ratio of both the companies is below the industry standard and hence the companies have a very low cash liquidity.
b. Current Ratio: the current ratio of both the companies is below the industry standard and hence the companies have a good standing as both are greater than 1 and show the good position against the current liabilities.
C. LT Debt to Equity: The debt portion of Amazon is more than the equity portion which indicates the company must be paying the higher cost of interest, the industry standard is lower in case of both the companies.
d. Total debt to equity: Due to higher long-term debt portion of the company, the ratio is higher in case of both the companies than the industry standard.
e. Interest Coverage: The interest coverage ratio in both the companies is much higher which indicates lower liquidity and the shortening of assets to the liabilities.
3. Valuation Ratios: Indicates the valuation of a companies share price to its actual financial and book value.
a. P/E ratio: the P/E ratio of both the company is higher in comparison to the industry standard which shows that the share price is highly valued.
b. Price to Sales Ratio: The P/S ratio of both the company is higher in comparison to the industry standard which shows that the share price is highly valued.
c. Price to Book Ratio: The intrinsic value of the share of both the companies is lower than the share price of the company, hence the company is highly valued. P/B ratio of Amazon is higher in case of Amazon to that of Apple.
d. Price to Tangible book: The Price to Tangible book of both the company is higher in comparison to the industry standard which shows that the share price is highly valued.
e. Price to Cashflow: The price to cash flow ratio for both the company is higher than industry standard which shows that the company cash flow is lower than that of price per share.
f. Price to free cash flow: The free cash flow of the company is higher than their respective industry which indicates the price of the companies is highly valued.
4. Management Effectiveness:
a. Return on assets: The sales of the company in case of Apple is higher to that of the industry and in case of Amazon is comparatively lower, indicating the high value of assets with the company.
b. Return on Investment: The investment return for Amazon is lower in comparison to that of the industry standard, and in case of Apple is higher than the i9ndustry standard which indicates the good return.
c. Return on Equity: The rate of return on equity is higher in case of Apple which indicates good returns per share for the equity part and that in the case of Amazon is lower than the industry standard but has a higher industry standard.
6. Dividend yield: Is higher in the case of Amazon, which shows that the company is highly profitable and has low plans for further expansion that's why paying the dividend. Unlike in case fo Amazon which has a low dividend yield.
7 Payout ratio: The payout ratio of Apple is higher in comparison to that of Amazon, which means that Apple has a higher market cap and has high profitability.
8. Revenue per employee: The revenue per employee of Apple is higher than Amazon, which indicates that the number of the employee of Amazon are much higher to that of Apple and hence the profitability is lower.
9. Net Income per employee: The net income per employee of Apple is higher than Amazon, which indicates that the number of the employee of Amazon are much higher to that of Apple and hence the profitability is lower.
10. Receivable Turnover: The receivable turnover ratio is lower than the industry standard and is almost the same for both the companies. The receivable turnover is higher in actual which indicates the company is not able to collect money in due time.
12 Inventory turnover is lower in the case of Apple which shows that the company has a lower inventory to that of the industry standard which is opposite in case of Amazon.
13. Asset Turnover same to that of the industry standard in case of Amazon and Apple which shows that the assets are at the lower end to that of the turnover.
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