https://finance.yahoo.com/quote/AAPL/cash-flow?p=AAPL
| Cash Flow Coverage Ratio |
Operating Cash Flows |
|
|
Total Debts |
||
|
2019 |
2018 |
|
|
Operating Cash Flow Ratio = |
$ 69,391,000 |
$ 77,434,000 |
|
$ 108,047,000 |
$ 114,483,000 | |
| Operating Cash Flow Ratio = |
0.64 |
0.68 |
|
Operating margin |
Operating Cash Flows |
|
|
Sales |
||
|
2019 |
2018 |
|
|
Operating Margin = |
$ 69,391,000 |
$ 77,434,000 |
|
$ 260,174,000 |
$ 265,595,000 | |
| Operating Margin = |
27% |
29% |
| Free Cash Flow to Operating Cash Flow | ||
|
FCF / OCF = |
Free Cash Flow |
|
Cash from Operations |
||
|
2019 |
||
| Free Cash flow = | Cash from Operations + Cash from Investing | |
| 69,391,000 + 45,896,000 |
= 115,287,000 |
|
|
FCF / OCF |
$ 115,287,000 |
|
|
$ 69,391,000 |
||
| FCF / OCF |
1.66 |
|
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Discussion
Apple is an American publicly-traded company listed at NASDAQ with a symbol of AAPL. The company's cash flow statement shows that its operating cash flows have been performing better than investment and financing cash flows. However, Apple's investment cash has been increasing over the last three years ( Yahoo Finance, 2020) . On the other hand, the company’s financing cash flow has been declining over the past three years.
The cash flow coverage ratio measures a company's capability to settle its short term obligations using its cash flows. A high cash flow coverage ratio is favorable for a company because it means that the company can pay its current liabilities using its cash flows. Apple’s cash flow coverage ratio is unfavorable because its operating cash flow for the past two years is less than its total debts.
The operating margin ratio measures the percentage of the total revenue made up by operating cash flows. A higher operating cash flow margin is more encouraging than a lower ratio because it indicates that the entity is making profits from its operating activities. Apple's operating cash flow margin for 2018 and 2019 is 29% and 27 %, respectively ( Yahoo Finance, 2020) . These ratios are relatively low, showing that the company has not been generating reasonable income from its operating activities.
The free cash flow ratio measures the efficiency of how much money a company generates compared to the amount it uses to run its operating activities. In 2019, Apple reported a free cash flow ratio of 1.66, which was favorable ( Yahoo Finance, 2020) . A high ratio indicates that the company generated reasonable cash from its operating activities than the money it spent on investment activities.
References
Yahoo Finance. (2020, October 26). Apple Inc. (AAPL) . Yahoo Finance - Stock Market Live, Quotes, Business & Finance News. https://finance.yahoo.com/quote/AAPL/cash-flow?p=AAPL
