Finance

Apple Inc.

Liquidity Analysis
Apple Inc. has current assets worth  36,265 million and sufficient enough to fulfill its current obligations which stand at  19,282 million.  Apple seems to be in good shape because about 80 of the current assets are cash and short-term investments which can be readily converted into cash unlike inventory and receivables. Other current assets and liabilities have seen an increase in 2009.  The current ratio of Apple Inc. in 2009 was 1.88 and quick ratio was 1.86 which is reflective of the fact that Apple has successfully managed to keep lower inventory levels.

Capital Investment Analysis
Apple has invested an additional  9,245 million in capital investment in 2009. Non-current assets have increased by  7,261 million in 2008 to  17,586 million in 2009.  This shows that Apple has increased its investment in its operations and is therefore making efforts to grow further.

Efficiency Analysis
Net income has steadily increased over the last three years. Net profit margin was 14.6 in 2007 which increased to 14.88 in 2008 which eventually increased to 15.6 in 2009. Cashflow from operating activities also saw a steady increase over the last three years with a 75 increase in 2008 and a 6 increase in 2009.

This reflects that the companys operations are not only profitable but generate adequate cashflow as well.
(Apple. n.d)
Grade
Apple Inc. deserves an A.

It is a progressive organization and seems to have out done when compared to the other two companies. Although its profit margin may have been a bit low than the other two companies but its liquidity position is the best and has made significant capital investment as well which bodes well for the existing investors and is a positive indication to potential investors
McDonalds Corp.
Liquidity Analysis

Although McDonalds liquidity had significantly deteriorated in 2008 when current liabilities had exceeded current assets and both current and quick ratio were 0.8 and 0.77 respectively which was below the industry standard. However the situation has considerably improved in 2009 and current assets are respectably above current liabilities. McDonalds current ratio and quick ratio in 2009 were 1.38 and 1.34 respectively.

Capital Investment Analysis
McDonalds has increased its capital investment in 2009 with an estimated cash outflow of  524 million. However noncurrent assets decreased from  25,811 million in 2008 to  24,943 million in 2009. It could have been possible that besides cash outflow for investing activities McDonalds disposed of some capital assets and as a result of those disposals might have been more than additions in 2009.

Owing to the economic crisis McDonalds seems to be recovering from the recession it faced in 2008 along with many multinationals around the world.

Efficiency Analysis
Profitability went down in 2008 from a net profit margin of 13.7 in 2007 to 10.2 in 2008. However in 2009 it improved to 18.3 which was way above the last two years and an 80 increase over the last year. Cash generated from operations also steadily increased over the last three years. Cashflow from operations was  4,876 million in 2008 which was an increase of 12 from an operational cash inflow of  4,341 million in 2007. Cashflow from operations further increased in 2009 to  5,917 million which is reflective of the increased trading activity.  Hence it shows that McDonalds operations are doing considerably well and have shown not only increased profitability over the last year but a better operational cash inflow as well. (MSN Moneycentral.n.d.)
Grade
McDonalds deserves a B grade.

Although profitability has been the best for the current year when compared to both Apple and PG, but its cashflow position is appropriate and has made a modest capital investment. Hence McDonalds liquidity position and capital investment is inferior to Apple Inc.

Procter  Gamble Co.

Liquidity Analysis
PGs liquidity position has further deteriorated over the last year. Both current and quick ratios were 0.8 and 0.52 in 2008 which further slumped to 0.71 and 0.49 in 2009. Not only the current ratio was below the recommended 1.0 threshold but quick ratio was dangerously low and this largely due to unconventionally higher inventory levels maintained.

Although PG did try to reduce its inventory levels and the inventory figure decreased by 18 in 2009 but still the liquidity crisis looms large. The companys current assets therefore remain significantly insufficient to pay off its current obligations.

Capital Investment Analysis
PG has decreased its capital investment in 2009 with cashflow from investing activities witnessing a decline of 8.  As mentioned above the company is already facing shortage of cash which owing to which there are doubts as to whether it would be able to fulfill obligations let alone investing for capital purposes. Furthermore non-current assets have also decreased from  119 million in 2008 to an estimated  113 million in 2009.

However capital investment is crucial for a companys growth but in case of PG here it seems that it is only concentrating to survive for now which is true of many huge conglomerates around the globe which have come across financial crisis owing to the global economic recession.

Efficiency Analysis
On the profitability front, PG has managed to both create and increase profits over the last year. Net profit margin in the last three years was 13.8 (2007), 14.8 (2008) and 17 in (2009) respectively. As can be seen profit margin was the highest in 2009 when compared with the profit margin in the other two years and PG managed this increase even when its revenue had seen a little slump in 2009 as compared to last year. However cashflow from operations had dropped this year. (PG. n.d.)
Grade
PG deserves a C grade.

PG has performed poorly on both the liquidity and capital investment front. Not only its liquidity position is dangerously adverse but by decreasing its capital investment it has deliberately halted its growth. The only saving grace is the companys impressive profit margin for the current year. The company seems to be in substantial financial woes.