Your parents are considering investing in Apple Inc. common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Apple's financial statements are presented in Appendix A. The complete annual report, including the notes to the financial statements, is available at the company's website.

Instructions

(Follow the approach in the chapter for rounding numbers.)

a. Make a 3-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. Comment on the significance of the trend results.

b. Compute for 2015 and 2014 the

(1) Profit margin.

(2) Asset turnover.

(3) Return on assets.

(4) Return on common stockholders' equity.

How would you evaluate Apple's profitability? Total assets at September 28, 2013, were $207,000 and total stockholders' equity at September 28, 2013, was $123,549.

c. Compute for 2015 and 2014 the

(1) Debt to assets ratio.

(2) Times interest earned.

How would you evaluate Apple's long-term solvency?

d. What information outside the annual report may also be useful to your parents in making a decision about Apple?