Key figures for the recent two years of both Apple and Google follow. Required 1. Compute profit
Question:
Required
1. Compute profit margins for (a) Apple and (b) Google for the two years of data shown.
2. Which company is more successful on the basis of profit margin? Explain.
3. Compute the current ratio for both years for both companies.
4. Which company has the better ability to pay short-term obligations according to the current ratio?
5. Analyze and comment on each companys current ratios for the past two years.
6. How do Apples and Googles current ratios compare to their industry (assumed) average ratio of 2.0?
Apple Google $ millons Net income Net sales Current Year Prior Year Current Year Prior Year $ 53,394 $ 39,510 182,795 68,531 63,448 $16,348 74,989 90,114 19,310 $14,136 233,715 89,378 80,610 66,001 78,656 16,779 Current assets. Current liabilities..
Step by Step Answer:
1 Apple Current year profit margin 53394 233715 228 Prior year profit margin 39510 182795 216 Google ...View the full answer
Financial Accounting Fundamentals
ISBN: 978-1259726910
6th edition
Authors: John Wild, Ken Shaw, Barbara Chiappetta
Related Video
The current ratio is a financial ratio that measures a company\'s ability to pay its short-term obligations with its short-term assets. It is calculated by dividing a company\'s current assets by its current liabilities. The formula for calculating the current ratio is: Current Ratio = Current Assets / Current Liabilities Current assets are assets that can be converted to cash within one year, while current liabilities are debts that are due within one year. A current ratio of 1:1 or greater is generally considered good, as it indicates that a company has enough current assets to cover its current liabilities. A current ratio of less than 1:1 may suggest that a company may have difficulty meeting its short-term obligations. It\'s important to note that the current ratio is just one of many financial ratios that can be used to assess a company\'s financial health. It should be used in conjunction with other financial ratios and qualitative factors to make informed decisions about investing or lending to a company.
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