Assess the impact of Apple’s debt load and earnings performance on its debt to capital and debt to equity ratios from 1999 through 2002.

Financial statement development and analysis – act 12

Part C: Apple’s debt load and earnings performance had a significant impact on the company’s debt to capital and debt to equity ratios from 1999 through 2002. During this period, the company’s total liabilities increased from $3 billion in 1999 to almost double that amount by 2002; this resulted in a significant increase in both its debt to capital (from 48% in 1999 to 63% in 2002) and its debt to equity (from 8.7x in 1999 to 12.0x by 2002) ratio during the same time frame. This suggests that Apple was taking on more financial risk as it relied heavily on borrowings instead of relying solely upon shareholder investments or retained earnings for funding purposes.

Part D: The evidence available when looking at Apple’s fixed contractual expenses (e.g., lease payments, loan repayments etc.) would suggest that they were able cover these costs throughout their entire 4-year period, with relatively minor variations year over year; however, there may be some room for concern when it comes to 2001 & 2002 due primarily due because net income decreased significantly from what it was back 1998 & 2000 respectively which could cause some strain financially if not monitored carefully.

Part E: While Apple had seen overall positive growth between 1998 and 2000 with regards revenue generated through sales of products/services as well reasonably healthy profits each year,  the subsequent two years did see a downturn with net income decreasing steadily until just barely breaking even by 2003 – this makes predicting future earnings somewhat challenging without considering factors such external market conditions or organizational decisions related internal spending patterns like research & development initiatives among other potential cost drivers. Thus far the data available does provide reason believe current momentum will persist into 2004 however investors should also take caution since there no way know how long good luck last especially given highly cyclical nature technology sector which increases vulnerability general economic fluctuations.