Financial Analysis – Ratio Analysis

Financial Analysis of Apple Inc. and Microsoft Corporation: Fiscal Year 2024 Your Name Subject and Section Professor’s Name Date Introduction Apple Inc. and Microsoft Corporation are two significant information technology sector giants. All the key players in the industry are backed by robust and innovative technology, vibrant brands, and historical financial performance (Gao, 2022). The financial position of these corporations is compared in this paper using financial ratios for the fiscal year ending December 2024. Liquidity will be measured as the ability to sell assets or collect receivables to pay for the current liabilities, and solvency will be established as the ability to repay the debt factors in the present year to the outside investors based on the comparative prior-year figures and cross-check the current year. Ratio Analysis and Findings Change in Financial Position The financial position of Apple Inc. (2024) deteriorated according to the number as it recorded a -1.33% negative rate. This implies that its ending net assets, amounting to $56.95 billion, were lower than the initial net assets of $62.15 billion and total revenues of $391.04 billion. The negative sign may indicate a problem in reinvestment or capital retention. Comparatively, Microsoft Corporation (2024) showcased a slightly better figure for the financial year FY 2018, a favorable ratio of 1.63% proved the world, through the turnaround of its increment in net assets to $ 202.27 Billion from $ 198.15 billion on the total revenues of $ 252.19 billion FY 2018. This kind of growth indicates the company's ability to increase, accumulate, and accumulate value most efficiently (Laghari et al., 2023; Cashwell et al., 2019). Therefore, Microsoft performed better than Apple by demonstrating a more efficient ability to increase its net asset base in the business period. Current Ratio The current ratio of Apple Inc. (2024) is 0.87 – its current liabilities of $176.39 billion are higher than its current assets of $152.99 billion. Hence, we prefer a value higher than 1. This value indicates the possibility of liquidity problems or difficulties in responding to current liabilities without incurring external funding. Meanwhile, Microsoft Corporation’s (2024) current ratio in 2015 is much higher at 1.87, indicating a better position in covering the number of short-term liabilities, $93.60 billion, by current assets of $174.90 billion. Thus, Microsoft shows better liquidity management than Apple, having a more secure liquidity cushion for short-term obligations (Cashwell et al., 2019; Allad et al., 2015). Quick Ratio Apple Inc.’s quick ratio is at $0.37, which signifies a poor liquidity status because it only looks at cash, $29.942 billion, and current investments, $35.230 billio...