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. Financial statements of Apple are available online. The complete annual report, including the notes to its financial statements, is available at the company’s website.

Instructions

a. Make a 5-year trend analysis, using 2015 as the base year, of (1) net sales and (2) net income. Comment on the significance of the trend results.
b. Compute for 2019 and 2018 the (1) debt to assets ratio and (2) times interest earned. How would you evaluate Apple’s long-term solvency?

c. Compute for 2019 and 2018 the (1) profit margin, (2) asset turnover, (3) return on assets, and (4) return on common stockholders’ equity. How would you evaluate Apple’s profitability? Total assets at September 30, 2017, were $375,319 million and total stockholders’ equity at September 30, 2017 was $134,047 million.

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