1. Part 1: financial statement analysis
Project Apple
Part 1: financial statement analysis

2. Outline Financial Statement Analysis Valuation Dividend Policy
Income Statement Analysis
Balance Sheet Analysis
Cash Flow Statement Analysis
Free Cash Flow
Valuation
Dividend Policy
Capital Structure

3. Income statement Discuss the profitability measured by
Gross margin
Operating margin
Profit margin
Discuss the change of profitability for the last 10 years. What is driving the change?

4. Balance Sheet Is there need to study liquidity of Apple?
Debt management ratios.
How has the debt ratio changed over time.

5. Combine balance sheet with income statement
Efficiency of Apple
Inventory turnover
Fixed assets turnover
Total assets turnover
Use of cash, wasted or needed?
Profitability on assets and equity
ROA
ROE

6. Market Ratio
Peice-to-earnings
Price-to-Book

7. Cash flow statement
Why operation cash flow is different from net income?
FCF: what is Apple’s free cash flow in 2012? How is it different from net income

8. Market ratios
What is the trailing PE ratio for Apple? What does it mean?
What is the market-to-book ratio for Apple? What is the implication?

9. DuPont analysis
Compared with its rivals, what is driving the ROE of Apple?
How to break down ROE into profitability, asset efficiency and equity multiplier

10. Part II: Capital structure
What is Apple’s current capital structure?
How to change Apple’s capital structure?
How the use of debt would affect net income?
How the use of debt would to affect number of shares outstanding?
Calculate EPS under new capital structure
What effect does increasing debt have on cost of equity?
Calculate Apple’s fair value under new capital structure