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Apple, Inc. - Buffet

In: Business and Management

Submitted By ambells37
Words 789
Pages 4
Buffet Ratio Analysis
Current Ratio Interpretation:
Traditionally, a company with a ratio over 1.0 is considered sound; however, Warren Buffet feels that the current ratio is practically useless in determining whether or not a company has a durable competitive advantage. His theory suggests that companies with strong economies do not need high liquidity. Apple’s Current Ratio for 2012, in billions | Current Assets | $ 57,653 | Current Liabilities | $ 38,542 | Ratio | 1.496 |

Earnings Per Share Interpretation:
A higher earnings per share generally indicates a higher stock price, which is good for investors; however, according to Warren Buffet, a single year’s numbers cannot determine whether or not a company has a durable competitive advantage. He prefers to review the numbers over a ten year period, and he looks for a consistent upward trend. After reviewing Apple’s earnings per share, it appears that competitive advantage is working in their favor. Apple’s Earnings Per Share, 2003-2012 | Year | 2012 | 2011 | 2010 | 2009 | 2008 | Net Income | $ 41,733,000,000 | $ 25,922,000,000 | $ 14,013,000,000 | 8,235,000,000 | $ 6,119,000,000 | # Shares Outstanding | 929,277,000 | 915,970,000 | 899,805,500 | 888,325,973 | 872,328,975 | Earnings Per Share | $ 44.91 | $ 28.30 | $ 15.57 | $ 9.27 | $ 7.01 | | | | | | | Year | 2007 | 2006 | 2005 | 2004 | 2003 | Net Income | $ 3,496,000,000 | $ 1,989,000,000 | $ 1,328,000,000 | 266,000,000 | $ 69,000,000 | # Shares Outstanding | 855,262,568 | 835,019,364 | 782,887,234 | 366,726,584 | 358,958,989 | Earnings Per Share | $ 4.09 | $ 2.38 | $ 1.70 | $ 0.73 | $ 0.19 |

Return on Total Assets Interpretation:
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