Financial Statement Analysis DuPont Method Project

Financial Statement Analysis DuPont Method Project

Please work together in groups of approximately 5 people.  Turn in one project per group. Please also turn in a rating sheet for all the members in your group, including both their first and last names.  If you assign a particularly low score for a group member overall, please include the reason.

Project:

For the company Apple (stock symbol:  AAPL), please do the following:

Part 1      For the years 2016-2018:

1. Calculate the Current Ratio
   1. Is the trend improving or deteriorating?
   2. What does the absolute number and/or trend indicate with regards to how liquid the company is.

1. Calculate Inventory Turnover
   1. Is the trend improving or deteriorating?
   2. What does the absolute number and/or trend indicate with regards to how liquid the company is.

1. Calculate Days Sales Outstanding
   1. Is the trend improving or deteriorating?
   2. What does the absolute number and/or trend indicate with regards to how liquid the company is.

Financial Statement Analysis DuPont Method Project

Part 2        For the years 2014-2018:

1. Calculate the key financial ratios in the DuPont method as shown in the Merck Excel example.
2. Separately, calculate the company’s debt to capital ratio.  This ratio should reinforce the Assets to Equity ratio that is part of the DuPont Method formula.  Debt/cap = (STD+LTD) / (STD+LTD+Shareholders’ Equity).
3. State whether the trend in the company’s Return on Equity over the last five years is favorable or unfavorable.
4. State which factor (or factors) has driven the return trend.
5. Do you believe the company has room for future increases in ROE (yes/no)?  If yes, what factors would contribute? If no, what factors would contribute?
6. Overall, how would you rate the company’s risk versus return tradeoff?

Use www.sec.gov to obtain the information from 10-K’s.  Note: You should be able to get the bulk of the financial data from the section of the 10-K called “Selected Financial Data.”

Financial Statement Analysis DuPont Method Project

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