Apple Inc: Financial AnalysisProblem 1: Liquidity Analysis: Liquidity ratios are used to judge the short-term solvency of the company as if it had a capital fund sufficient turnover to repay its short-term obligations. Generally, two measures of liquidity ratios are used by analysts to assess the liquidity position of the company: • Current ratio • Quick liquidity ratio/Acid test ratio 1) Liquidity ratio: calculated as the ratio of liquidity current assets and current liabilities, this liquidity ratio is considered to be a true indicator of the liquidity of a company.Current ratio: current assets/current liabilities2011 2012 2013Current ratio 1.608438 1.495849 1, 6786392) Quick Ratio: A stricter measure of liquidity assessment, the quick ratio is calculated as the ratio of current assets less inventories to current liabilities.Quick Ratio: (Current Assets – Inventories) / Current Liabilities2011 2012 2013Ratio quick 1.580694 1.475326 1.678639Summary: With reference to the above liquidity analysis of Apple Inc. It can easily be inferred that the company fell into a liquidity trap in 2012 with a decline in the current ratio and the quick ratio providing evidence for this. However, the company improved its liquidity position in 2013 when the current ratio increased from 1.49 to 1.68 and the quick ratio from 1.47 to 1.67. Another important point to note is that there is a very negligible difference between current ratio and current ratio, which means that inventories represent a very small portion of current assets. Problem 2: Please point out that by referring to the financial statements of Apple Inc, we found that the company has a total outstanding bond worth $17 billion. Here is the detailed description of the bonds issued by Apple Inc: (MorningStar Analyst Team) Maturity Date Amount Credit Quality Price Coupon % Coupon Type Callable Rule 144 A Yield to Maturity % 5/3/2023 5 500.00 --- 90.1 2.4 Fixed No No 3.675 /3/2018 4,000.00 --- 97 1 Fixed No No 1.725/4/2043 3,000.00 --- 83.2 3.85 Fixed No No 4.945/3/2018 2,000.00 --- 99.3 0 FRN No No ---5/3/2016 1,500.00 --- 99.6 0.45 Fixed No No 0.615/3/ 2016 1,000.00 --- 99.8 0 FRN No No ---Problem 3: No Apple Inc bond issue has experienced a change in yield to maturity over the past year. Problem 4: Reference According to data issued by Apple Inc, the company does not have a bond issue with an embedded call option. The call option is an option given to bond issuers that allows them to repurchase the bond before maturity. Additionally, there is no provision for sinking funds. Problem 5: With reference to a bond issued by Apple Inc at a price of $99.3 and assuming that at maturity of 1 year the bond will have a yield to maturity of 8%, in this case, the value of the bond after one year will be: Future value = Value of the bond (1+ YTM) number of years * 2 = 99.3 * (1 + (0.08/2)) 1 * 2 = 99.3 / (1 + 0.04) 2 = $107.40 So the future value of the bond will be $107.40. The difference between the current value and the future value after one year is simply the amount of interest that will be earned by the investor during one year of holding the bond..