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Apple vs Microsoft
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CREATIVITY
Viktoriya Martynova, Buddhi Man Tamang, Rinat Ziyodillaev,
Sobirzhan Yergeshev
1) General Overview & Current position - 2019 Q4
-revenue was $33.717 billion and increased 12%
-operating income was $12.405 billion and increased 23%
-net income was $13.187 billion, and increased 49%
-gross margin in $23.3 billion, growth 15%
-operating expenses between $10.1 to $10.2 billion.
-other income/(expense) of $191 million
-tax rate of approximately 16%
Microsoft
General Analysis (current position - 2019 Q4)
-revenue was $64 billion, increased 2%
-operating income was $15.6 billion, decreased 0.4% than last year Q4
-net income $13.6 billion, 0.3% decreased than last year Q4
-gross margin $24.3 billion and growth 38.5%
-operating expenses between $8.7 billion and $8.8 billion
-other income/(expense) of $200 million
-tax rate of approximately 16.5 percent
Apple
General Analysis (current position - 2019 Q4)
What Are Liquidity Ratios?
2) Liquidity Ratios (Apple vs Microsoft)
It is the Finacial metrics that measure a company's ability to pay its short-term debt obligation
MICROSOFT (MSFT) LIQUIDITY RATIO FROM (2014-2019
Current Ratio for MSFT (2014-2019)
- A liquidity ratio calculated as current assets divided by current liabilities.
Current ratio
Quick Ratio for MSFT (2014-2019)
- A liquidity ratio calculated as (cash plus short-term marketable investments plus receivables) divided by current liabilities.
Quick Ratio
Cash Ratio for MSFT (2014-2019)
- A liquidity ratio calculated as (cash plus short-term marketable investments) divided by current liabilities.
Cash Ratio
Apple (AAPL) LIQUIDITY RATIO FROM (2014-2019)
Apple Current Ratio (2014-2019)
- Apple current ratio for the three months ending September 30, 2019 was 1.54.
Current Ratio
Apple Quick
Ratio (2014-2019)
- Apple Inc.’s quick ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Quick Ratio
Apple Cash
Ratio (2014-2019)
- Apple Inc.’s cash ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Cash Ratio
Operating ratio (also known as operating cost ratio or operating expense ratio) is computed by dividing operating expenses of a particular period by net sales made during that period. Like expense ratio, it is expressed in percentage.
3) Operating Ratios (Apple vs Microsoft)
Operating Expenses
Net
Sales
Operating Ratio = Operating Expenses / Net Sales
Apple
Apple
2018:
181.36B/247.42B= 0.73=73%
It therefore has the remaining 0.27% to cover nonoperating expenses such as interest payments, nonrecurring items, taxes, and other costs not directly related to the company's day-to-day operations.
Final Result 2018
Apple
2016:
157.40B/220.29B= 0.71=71%
It therefore has the remaining 0.29% to cover nonoperating expenses such as interest payments, nonrecurring items, taxes, and other costs not directly related to the company's day-to-day operations.
Final Result 2016
Operating Expenses
Net Sales
Microsoft
Microsoft
2018:
73.52B/105.88B= 0.69=69%
It therefore has the remaining 0.31% to cover nonoperating expenses such as interest payments, nonrecurring items, taxes, and other costs not directly related to the company's day-to-day operations.
Final Result 2018
Microsoft
2016:
65.08B/91.15B= 0.71=71%
It therefore has the remaining 0.29% to cover nonoperating expenses such as interest payments, nonrecurring items, taxes, and other costs not directly related to the company's day-to-day operations.
Final Result 2016
Laverage: Overall ability to pay Debts
Apple
Microsoft
4) Leverage Ratios (Apple vs Microsoft)
(Times)
Total Liabilities
Total Assets
Debt Ratio
2018: 240.62B/367.50B=0.65=65%
EBIT
Interest Expense 2018: 3.24B
2017: 2.32B
2016: 1.46B
Times Interest Earned Ratio
Times Interest Earned Ratio
2018
2017
2016
66.06B/3.24B=20 times
59.32B/2.32B=25 times
62.89B/1.46B=43 times
Total Liabilities
Total Assets
Debt Ratio
2018: 166.26B/245.50B=0.67=67%
EBIT
Interest Expense 2018: 2.73B
2017: 2.22B
2016: 1.24B
Times Interest Earned Ratio
Times Interest Earned Ratio
2018
2017
2016
44.83B/2.73B=16 times
36.63B/2.22B=17 times
26.61B/1.24B=21 times
Profitability Ratios: Apple vs Microsoft
5) Profitability Ratios (Apple vs Microsoft)
Return on Investment
Return on Assets
Return Ratios
Return on Tangible Equity
Return on Equity
Return on
Equity
Microsoft Return
Ratio Summary
ROE:
Microsoft Corp.’s ROE deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Title
ROA:
ROE:
Microsoft Corp.’s ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Apple Return
Ratios Summary
ROE:
Apple Inc.’s ROE improved from 2017 to 2018 and from 2018 to 2019.
Title
ROA:
Apple Inc.’s ROA improved from 2017 to 2018 and from 2018 to 2019.
Net Profit Margin
Gross Profit Margin
Margin Ratios
Apple Margin
Ratios Summary
Gross Profit Margin:
Apple Inc.’s gross profit margin ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Title
Net Profit Margin:
Apple Inc.’s net profit margin ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.
Microsoft Margin
Ratios Summary
Gross profit margin:
Microsoft Corp.’s gross profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.
Title
Net profit margin:
Microsoft Corp.’s net profit margin ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Conlusions
6) Conclusions
- In the battle of two of the largest companies in the world, Microsoft, in our opinion, comes out on top.
- We think growth in key areas during the last quarter for Microsoft shows that the company's most important products are experiencing high rates of demand.
- Apple, even with strong growth rates in certain product categories, saw its key contributor to sales decline again from the previous year.