Answer the following questions using the financial statements and the ratios that you computed.

Based on the current and quick ratios, was Apple in a better position to cover short term obligations in $2021$ or in $2022?$

Based on the AR ratios, which year did Apple do a better job at collecting receivables quicker?

Based on the inventory ratios, which year did Apple do a better job at managing and turning$-$over inventory?

The debt and equity ratios provide insight into the capital structure of a company. Does Apple rely more on creditors $($debt$)$ or owners for financing?

In terms of gross profit and net income, which year was better for Apple based on the ratios?

Ratio Formula

Current ratio Current assets $/$ current liabilities

Quick ratio Quick assets $/$ current liabilities

Working capital Current assets $-$ current liabilities

AR Turnover Net Sales $/$ average net AR

Average

Collection

Period

Inventory COGS $/$ Average Inventory

turnover

Average days in $365/$ Inventory Turnover

Inventory

Total Asset Net sales $/$ average total assets

Turnover

Debt ratio Total liabilities $/$ total assets

Equity ratio Total equity $/$ total assets Owner financing

Analysis

$>1$ signals that a company has more current assets than current liabilities in a dollar to dollar sense

Quick assets are defined as cash, short$-$term investments, and AR$.$ Different from current ratio because it analyzes only assets that are readily available in the form of cash. Provides a more rigorous indication of liquidity

Demonstrates a company's ability to satisfy short term obligations

Efficiency of collection, how quickly a company is able to collect AR$,$ # of times in a period that AR is collected, higher the ratio the shorter the average time between sales and cash collection, a decline could indicate that a company is granting credit to more customers and could be facing more bad debts Approximate number of days between the sale and collection of a sale on account

Efficiency of inventory management, the number of times the average inventory balance is sold in a period, high ratio could indicate strength in sales compared to a low ratio which could indicate overstocking and$/$or poor sales effort and advertising Number of days it normally takes to sell inventory

How efficiently a company utilizes all of its assets to generate revenue

Creditor financing and leverage

Creditor financing and leverage

Owner financing

Debt to equity Total liabilities $/$ shareholders' equity Compares resources provided by creditors to resources provided by owners. The higher the ratio,