Question
Apple Inc is the target company and is being compared to a competitor HP Inc. Write a thorough analysis of liquidity, activity, leverage, profitability, and
Apple Inc is the target company and is being compared to a competitor HP Inc. Write a thorough analysis of liquidity, activity, leverage, profitability, and market value ratios for both companies (apple and hp) based on the information in the chart below. Determine if you would recommend the Apple Inc. (Target Company) stocks based on your analysis. You may compare the market-to-book ratio and price-to-earnings ratio with those of the industry average to see if the stock is overvalued or undervalued. State clearly if you would recommend the stock (to buy or sell) or not.
Financial Analysis Summary
|
| APPLE INC. | HP INC. | ||
|
| 2020 | 2019 | 2020 | 2019 |
| NWC | (18,780,000) | 42,628,000 | (456,000) | (1,372,000) |
| EBIT | 69,964,000 | 69,313,000 | 3,940,000 | 2,765,000 |
| OCF | 71,340,000 | 71,379,000 | 3,666,000 | 3,510,000 |
| NI | 57,411,000 | 55,256,000 | 2,844,000 | 3,152,000 |
| CR | 1.36 | 1.54 | 0.79 | 0.80 |
| QR | 1.33 | 1.50 | 0.56 | 0.57 |
| D/E ratio | 396% | 274% | -1657% | -2905% |
| ICR | 24.35 | 19.38 | 16.28 | 11.43 |
| ROE | 87.87% | 61.06% | -127.65% | -264.21% |
| PM | 20.91% | 21.24% | 5.02% | 5.36% |
| MV (Total market value) | 2.093T |
| 31.9B |
|
| BV (Total book value) | 65,339,000 |
| -2,228,000 |
|
| M/B | 32,032,935.92 |
| (14,360,861.76) |
|
| Current share price (in $) | 123.08 |
| 23.30 |
|
| No. of shares outstanding | 17,005,199,870,003 | 17,005,199,870,003 | 1,373,218,884,120 | 1,373,218,884,120 |
| Past share prices (in $) | 123.08 | 73.41 | 23.3 | 20.55 |
| EPS | 0.34 | 0.32 | 0.021 | 0.023 |
| P/E | 36,456,428.21 | 22,592,147.87 | 11,250,351.62 | 8,952,934.03 |
| Beta | 1.3500 |
| 0.6966 |
|
| E(Rj) with CAPM | 13% |
| 7% |
|
| DY | 0.67% |
| 3.35% |
|
| Analyst earnings estimate | 4.33 |
| 2.95 |
|
| Earnigns growth rate | 128254965.12% |
| 142439974.13% |
|
| P1 with P/E ratio | 101,487,585.72 |
| 25,052,933.80 |
|
| P1 with CAPM | 139.27 |
| 24.99 |
|
| A/R period | 25.96 | 32.35 | 36.77 | 34.61 |
| Inventory period | 8.79 | 9.09 | 46.20 | 45.24 |
| A/P period | 95.29 | 115.20 | 116.51 | 113.56 |
| Operating cycle | 34.75 | 41.44 | 82.97 | 79.85 |
| Cash cycle | (60.54) | (73.76) | (33.54) | (33.70) |
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Managerial Accounting
Authors: Ray H. Garrison, Alan Webb, Theresa Libby
12th Canadian Edition
1260193276, 978-1260193275
