The Return On Equity Of Apple Inc

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The Return on Equity of Apple Inc has constantly grown over the past 3 years and continues to do so this year. This shows us how much the company can make with what the shareholders invested into the company. It goes from 35.30 percent in 2012 to 40.37 percent in just over three years. This can be seen as a good thing for Apple Inc or a bad thing for Apple Inc. This depends on what caused the increases in the Return on Equity for Apple. At first glance this is always a good thing to see until we break down the numbers and compared to the industry average is significantly higher. Just under 12% higher compared the the rest of the industry can say a lot about Apple Inc. Again if its good or bad depends on the breakdown of the ratios behind that 12% higher Return on Equity than the industry average. The first ratio to look at is the profit margin of the Apple Inc. This Ratio represents the net income divided by revenues. It can also be found by taking net profit and dividing that by sales. This shows us what amount of every dollar can Apple inc keep in its earnings. The higher the profit margin a company has the better the company has control over its costs to keep a higher margin. Apple inc has decreased over the past couple of years on average. In 2012 they were at 26.67% and are most recently at 22.62%. This four percent decrease is a bad thing but its such a small percent that it`s not significant enough to worry about especially when Apple Inc is still almost seven percent higher than the Industry average. Overall the Profit margin currently at 22.62%is a good thing for Apple Inc. The increase in profit margin can be related to the statistics that were stated in the first section of paper. Apple Inc has seen an increase in ... ... middle of paper ... ...its total equity. Apple Inc has increased over the past three years and has even increased going into the current year. Showing that Apple Inc has acquired more total debt on average than total equity. Currently Apple 's leverage is at 2.17 and was at 1.49 in 2012. Compared to the industry average this number is essentially nothing. The industry average is 43. This means on average the industry has 43 dollars in debt to one dollar in equity where apple is 2.17 to 1. Showing that Apple is growing in the industry without taking on more debt as it does. When we look at the numbers behind the leverage of Apple Inc we can reference the balance sheet in the appendix and look at the total debt divided by total equity. Apple Inc has total assets of 231839 million dollars divided by total equity of 111547 million dollars to get Apple Inc`s 2.08 financial leverage from 2014.
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