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Case Study - Business
Financial Analysis Report and
EVA
Apple Inc. Financial Analysis Report (2019–2021)
Introduction
Apple Inc. (AAPL), headquartered in Cupertino, California, is a global leader in consumer
electronics, software, and digital services. Founded in 1976, the company has become one of
the world’s most valuable and recognizable brands through continuous innovation and a
diversified product portfolio that includes the iPhone, iPad, Mac, Apple Watch, and a growing
ecosystem of services such as iCloud, Apple Music, and the App Store.
This report provides a comprehensive financial analysis of Apple’s performance during the fiscal
years ending in 2019, 2020, and 2021. It evaluates Apple’s financial statements, interprets key
operational and efficiency ratios, and calculates Economic Value Added (EVA) to determine
whether the company has generated value over and above its cost of capital. The goal is not
only to assess the firm’s profitability and efficiency, but also to understand its capital structure,
liquidity position, and economic sustainability over time.
Given Apple’s dominance in the global technology sector, analyzing its financial position offers
valuable insights into how a mature, large-cap company maintains operational excellence and
adapts to global challenges — such as the COVID-19 pandemic — while continuing to deliver
value to shareholders. This report also aims to connect theoretical finance concepts with real-
world corporate data, aligned with learning outcomes in accounting and business finance
(Apple Inc., 2021; MacroTrends, 2024; Investopedia, 2024).
1. Financial Statements Overview
Income Statement Highlights
In fiscal 2019, net sales reached US $260.17 billion, with net income US $55.26 billion
(Investopedia, 2020). In 2020, net sales increased to US $274.52 billion, and net income rose to
US $57.41 billion (MacroTrends, 2024; Annual-Statements, 2024). By 2021, revenue surged to
US $365.82 billion, and net income climbed to US $94.68 billion (MacroTrends, 2024; Apple,
2021).
Operating income followed similar trends: US $63.93 b in 2019, US $66.29 b in 2020, and
US $108.95 b in 2021 (MacroTrends, 2024).
Cash Flow & Liquidity
In 2019, Apple’s operating cash flow was approximately US $69.4 billion, with subsequent
growth to around US $80.7 billion in 2020 (Annual-Statements, 2024). Apple’s massive cash
reserves and relatively conservative debt profile ensure strong liquidity, even though its
traditional current ratio is often below.
Balance Sheet Summary
Apple’s total assets rose from approximately US $323.9 billion in 2020 to US $351.0 billion in
2021 (AlphaQuery, 2024; MacroTrends, 2024). Shareholders’ equity declined from
US $90.5 billion in 2019 to US $65.3 billion in 2020, then to US $63.1 billion in 2021, reflecting
the company’s substantial share repurchases (AlphaQuery, 2024; MacroTrends, 2024).
Table 1: Financial Highlights
Year End Revenue Net Income Operating CF Total Assets Equity
(US$ b) (US$ b) (US$ b) (US$ b) (US$ b)
Sep 28 201 260.17 55.26 ~69.4 ~338 90.48
9 (estimate)
Sep 26 202 274.52 57.41 ~80.7 323.9 65.33
0
Sep 25 202 365.82 94.68 — 351.0 63.09
1
2. Ratio Analysis
Inventory Turnover
Inventory turnover is a key efficiency metric that reflects how quickly a
company sells and replaces its stock over a period. It is particularly
significant for companies like Apple that deal in high-volume, fast-moving
consumer electronics. A high inventory turnover ratio generally indicates
strong sales performance, efficient inventory management, and reduced
holding costs. It can also highlight the effectiveness of supply chain logistics,
forecasting accuracy, and product demand planning (Quill Capital Partners,
2024).
In 2020, Apple reported an inventory turnover ratio of approximately 46.66 times, meaning the
company sold and replaced its inventory almost 47 times within the year. In 2021, the ratio
decreased slightly to 35.71 times. Despite this reduction, these values remain significantly
above the industry average, which typically ranges between 10 to 20 times for electronics
manufacturers and retailers (Stock-Data, 2024). The reduction in 2021 could be attributed to
global supply chain disruptions and increased demand variability due to the pandemic and
production challenges across regions (Apple Inc., 2021).
Apple’s extremely high turnover reflects strong product demand, fast-moving inventory cycles,
and minimal instances of overstock. It also suggests tight control over procurement and
distribution, avoiding excess warehousing costs and inventory write-downs. These figures
emphasize Apple’s operational strength and responsiveness to real-time consumer demand.
Overall, the company's inventory efficiency is a core driver of its profitability and working
capital optimization (MacroTrends, 2024).
Fixed Asset Turnover
Fixed asset turnover was calculated at 7.39× in 2020 and 9.21× in 2021 (Revenue ÷ Property,
Plant & Equipment), indicating effective utilization of physical resources (Stock-Data, 2024).
Total Asset Turnover
From MacroTrends data: Apple’s total asset turnover improved from around 0.85× in 2020 to
~1.04× in 2021 (Revenue ÷ Total Assets). An increasing trend suggests better productivity of the
asset base (AlphaQuery, 2024; MacroTrends, 2024).
Liquidity Ratios
Liquidity ratios, including the current ratio and acid-test (quick) ratio, measure a company’s
ability to meet short-term obligations using its most liquid assets. These indicators are
particularly useful in assessing the operational flexibility and short-term financial health of a
business. Typically, a ratio above 1 is considered favorable, as it indicates that the company has
sufficient current assets to cover its liabilities (Investopedia, 2024).
Apple’s current ratio for the period under analysis was consistently below 1, which might
initially raise concerns. However, this metric should be interpreted in the context of Apple’s
unique capital and operational strategy. Rather than holding excessive current assets, Apple
maintains lean working capital practices, relying on strong operating cash flows, short cash
conversion cycles, and highly liquid investments to manage its obligations efficiently (Quill
Capital Partners, 2024). The company’s vast cash reserves, which often exceed US $100 billion
in various short-term and marketable securities, significantly reduce any liquidity risk despite
the formal ratios appearing low (MacroTrends, 2024).
The acid-test ratio, which excludes inventory from current assets, further emphasizes Apple’s
reliance on liquid instruments rather than unsold goods. This aligns with the company’s high
inventory turnover and just-in-time inventory practices. Apple’s model reflects a deliberate
strategy to optimize capital use, ensuring cash is not tied up unnecessarily in idle assets. The
company’s access to credit markets, low debt ratios, and reliable revenue inflows from
recurring services further support its solid liquidity standing (Apple Inc., 2021).
Interpretation & Industry Comparison
Inventory turnover well above peers indicates exceptional demand forecasting and minimal
hold times.
Fixed asset turnover in the 7–9× range demonstrates high revenue per dollar of capital
investment.
Total asset turnover improving toward ~1.0 indicates that Apple becomes more effective at
converting assets to revenue.
Apple’s low formal liquidity ratios are mitigated by its vast cash reserve and low reliance on
short-term assets.
3. Economic Value Added (EVA) Analysis
Understanding EVA
EVA measures whether a firm earns above its cost of capital, using the formula:
EVA = NOPAT – (Invested Capital × WACC)
(Investopedia, 2024; Wall Street Oasis, 2024).
EVA Estimates for Apple
2019: NOPAT ~US $53.45 b; Capital ~US $50.66 b; WACC ~14.73%; EVA = US $45.99 b
2020: NOPAT ~US $58.67 b; Capital ~US $36.25 b; WACC ~15.11%; EVA = US $53.20 b
2021: NOPAT ~US $91.41 b; Capital ~US $42.70 b; WACC ~15.26%; EVA = US $84.89 b
(Quill Capital Partners, 2024; Finbox, 2024)
Table 2: EVA Summary
Year NOPAT Capital (US$ b) WACC (%) EVA (US$ b)
(US$ b)
2019 53.45 50.66 14.73 45.99
2020 58.67 36.25 15.11 53.20
2021 91.41 42.70 15.26 84.89
Interpretation
Apple generated strong positive EVA throughout all three years, confirming that it consistently
delivered value well above its cost of capital. The significant growth in EVA by 2021 underscores
Apple’s operating and strategic strength.
4. Discussion & Conclusion
Performance Overview
Over the three fiscal years analyzed, Apple displayed impressive and sustained financial
performance, despite external disruptions such as trade tensions and the global COVID-19
pandemic. From 2019 to 2021, the company grew its revenue from US $260.17 billion to
US $365.82 billion, representing a compound annual growth rate (CAGR) of nearly 18%. Net
income followed a similar upward trajectory, increasing from US $55.26 billion in 2019 to
US $94.68 billion in 2021 — a gain of over 70% in just two years (Apple Inc., 2021; MacroTrends,
2024).
The surge in 2021 was primarily driven by strong global demand for the iPhone 12 series,
growth in Mac and iPad sales due to remote work and education, and a 27% year-over-year
increase in revenue from the Services segment (Investopedia, 2024). Operating income also
rose significantly, and the company’s operating margin remained above 25%, indicating
excellent cost control and strong pricing power (Apple Inc., 2021).
While Apple’s equity base decreased slightly due to aggressive share repurchase programs, total
assets and operating cash flows continued to rise. This demonstrates Apple’s ability to return
value to shareholders while still expanding its resource base (MacroTrends, 2024). In addition,
asset turnover ratios improved year over year, reflecting more efficient use of the company’s
asset base to generate sales. Liquidity remained solid, and Apple’s conservative financial
policies ensured that the company was not overexposed to debt or external financing risks
(Quill Capital Partners, 2024).
Taken together, Apple’s performance over this period illustrates a resilient and well-managed
organization that continues to grow in scale and profitability, even under uncertain economic
conditions.
Ratio Summary
Inventory turnover: 46.7× in 2020; 35.7× in 2021 — indicating high demand and lean
inventory.
Fixed asset turnover: ~7.4× in 2020, rising to ~9.2× in 2021 — showing strong asset
utilization.
Total asset turnover: Improved from ~0.85× to ~1.04× — reflecting better efficiency in
asset deployment.
Liquidity ratios: Remained below 1, but liquidity is robust due to Apple's large cash reserves
and short cycle working capital.
EVA Insights
Apple consistently generated high positive EVA—US $46 b in 2019, US $53 b in 2020, and
US $85 b in 2021—indicating returns significantly above the cost of capital.
Limitations & Reflections
EVA calculations rely on third-party estimates; actual WACC and capital figures may differ
slightly.
Inventory/asset turnover ratios are based on year-end values and may not reflect intra-year
fluctuations.
EVA may undervalue firms with substantial intangible assets; nonetheless, Apple’s tangible
asset base remains lean and efficient.
References
AlphaQuery (2024) Apple: Total Assets and Turnover Ratios.
Annual-Statements (2024) Apple Inc. Annual Report 2020 – Form 10-K.
Apple (2021) Q4 Consolidated Financial Statements FY2021.
Finbox (2024) Apple Inc. EVA and Efficiency Tools.
Investopedia (2020) Apple's Most Profitable Business Lines.
MacroTrends (2024) Apple Financial Statements 2019–2021.
Quill Capital Partners (2024) Apple Inc. Financial Ratio Analysis Report.