AA 4-1 Company Analysis LO A1 6:56 Refer to Apple's financial statements in Appendix A to answer the following. Required 1. Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 30, 2017. 2. Compute the current ratio and acid-test ratio as of September 30, 2017, and September 24, 2016. 3. Does Apple's 2017 current ratio outperform or underperform the (assumed) industry average of 1.5? 4. Does Apple's 2017 acid-test ratio outperform or underperform the (assumed) industry average of 1.0? nces Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the current ratio and acid-test ratio as of September 30, 2017, and September 24, 2016. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the current ratio and acid-test ratio as of September 30, 2017, and September 24, 2016 2017 Acid-Test Ratio S millions Current Ratio Current Ratio 2016 Acid-Test Ratio $ 20,289 53,892 17,874 20.484 46,673 15,754 Current assets Cash and equivalents Short-term marketable sec Accounts receivables, net Inventories, net Vendor non-trade receivables Other current assets Total current assets Total quick assets Total current liabilities Radio 20,289 53,892 17,874 4,855 17.799 13,936 128,645 17.799 13,936 20,484 46,6733 15,754 2,132 13,545 8.283 106,871 $ 79,006 1.35 13,545 8,283 $ S $ $ 123,790 100,814 1.23 $ 100,814 1.28 $ 104,739 79,006 1.33 September 24, 2016 Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 30, 2017 ASSETS Current assets Cash and cash equivalents $ 20,289 Short-term marketable securities 53.892 Accounts receivable, less allowances of $58 and $53, respectively 17,874 Inventories 4,855 Vendor non-trade receivables 17.799 Other current assets 13.936 Total current assets 128,645 Long-term marketable securities 194.714 Property, plant and equipment, net 33,783 Goodwill 5.717 Acquired intangible assets, net 2.298 Other non-current assets 10.162 Total assets 375,319 20,484 46,671 15,754 2.132 13,545 8,283 106,869 170,430 27.010 5,414 3.206 8,757 321.686 s LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Deferred revenue, non-current Long-term debe Other non-current liabilities Total liabilities Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, S0.00001 par value: 12,600,000 shares authorized: 5,126,201 and 5.336,166 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income (loss) Total shareholders' equity Total liabilities and shareholders' equity See accompanying Notes to Consolidated Financial Statements, 49,049 25,744 7.548 11,977 6,496 100,814 2,836 97,207 40,415 241.272 37,294 22,027 8,080 8,105 3,500 79,006 2.930 75,427 36,074 193,437 35,867 98,330 (150) 134.047 375,319 31.251 96,364 634 128.249 321.686 APPL September 26, 2015 $ 233,715 140,089 93,626 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, 2017 September 24, 2016 Net sales 229,234 $ 215.639 Cost of sales 141.048 131,376 Gross margin 88,186 84.263 Operating expenses Research and development 11,581 10,045 Selling general and administrative 15.261 14,194 Total operating expenses 26.842 24,239 Operating income 61,344 60,024 Other income (expense).net 2,745 1.348 Income before provision for income taxes 64,089 61,372 Provision for income taxes 15.738 15,685 Net income 48,351 45,687 8,067 14.329 22,396 71.230 1.285 72,515 19.121 53.394 S Farming per share Diluted Shessed in computing camins pershare: 9.27 9.21 S $ 8.35 8.31 9.28 9.22 $ Diluted Cash dividends declared per share 5.217.242 5.251.692 2.40 5.490,820 5.500.281 2.18 5.753.421 5.793.069 1.98 $ See accompanying Notes to Consolidated Financial Statements 1.315 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 30, 2017 September 24, 2016 September 26, 2015 Net income 48,351 $ 45,687 $ 53,394 Other comprehensive income (loss) Change in foreign currency translation, net of tax effects of $(77), S8 and $201, respectively 224 75 (411) Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of $(478), $(7) and S(441), respectively 7 2.905 Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit) of $475,5131 and 5630, respectively (1,477) (741) (3,497) Total change in unrealized gains/losses on derivative instruments, net of tax (162) (734) (592) Change in unrealized gain losses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $425, S(863) and $264, respectively (782) 1.582 (483) Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit) of 535, 5(31) and (32), respectively (64) 56 59 Total change in unrealized gains/losses on marketable securities, net of tax (846) 1.638 (424) Total other comprehensive income doss) (784) 979 Total comprehensive income (1.427) 47,567 S 46.666 S 51.967 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Common Stock and Comprehensive Total Additional Paid-In Capital Retained Income Shareholders Shares Amount Earnings (Loss) Equity Balances as of September 27, 2014 5,866,161 $ 23,313 S 87,152 $ 1,082 S 111,547 Net income 53,394 53,394 Other comprehensive income (loss) (1427) (1.427) Dividends and dividend equivalents declared (11.627) (11,627) Repurchase of common stock (325,032) (36,026) (36,026) Share-based compensation 3.586 3.586 Common stock issued, net of shares withheld for employee taxes 37.624 (231) 609) (840) Tax benefit from equity awards, including transfer pricing adjustments 748 748 Balances as of September 26, 2015 5.578,753 $ 27,416 92.284 $ (345) S 119.355 Net income 45.687 45.687 Other comprehensive income (loss) 979 979 Dividends and dividend equivalents declared (12.188) (12.188) Repurchase of common stock (279.609) (29.000) (29.000) Share-based compensation 4.262 4.262 Common stock issued act of shares withheld for employee taxes 37.022 (806) (419) (1.225) Tax benefit from equity wards, including transfer pricing adjustments 379 379 11 (1.225) 634 $ (784) Common stock issued, net of shares withheld for employee taxes 37.022 (806) (419) Tax benefit from equity awards, including transfer pricing adjustments 379 Balances as of September 24, 2016 5.336,166 s 31,251 $ 96,364 $ 48,351 Other comprehensive income (loss) Dividends and dividend equivalents declared (12.803) Repurchase of common stock (246,496) (33.001) Share based compensation 4,909 Common stock issued, net of shares withheld for employee taxes 36,531 (913) (581) Tax benefit from equity awards, including tander pricing adjustments 620 Balances as of September 30, 2017 5.126,2015 35.867 S 98 330 S See accompanying Notes to Consolidated Financial Statements 379 128,249 48,351 (784) (12,803) (33.001) 4.909 (1.494) (150) 620 134.047 ARRI September 26, 2015 $ 13,844 53,394 11.257 3,586 1.382 385 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years ended September 30, 2017 September 24, 2016 Cash and cash equivalents, beginning of the year 20,484 21,120 Operating activities Net income 48,351 45,687 Adjustments to reconcile net income to cash generated by operating activities Depreciation and amortization 10.157 10,505 Share-based compensation expense 4,840 4,210 Deferred income tax expense 5.966 4,938 Other (166) 486 Changes in operating assets and liabilities: Accounts receivable, net (2,093) 527 Inventories (2.723) 217 Vendor non-trade receivables (4.254) (51) Other current and non-current assets (5.318) 1,055 Accounts payable 9,618 1.837 Deferred revenue (626) (1.554) Other current and non-current liabilities (154) (2,033) Cash generated by operating activities 63.598 65,824 lovesting activities Purchases of marketable securities (159.486) (142,428) Proceeds from maturities of marketable securities 31.775 21,258 Proceeds from sales of marketable securities 94.566 90,536 Payments made in connection with business acquisitions, net (329) (297) 417 (238) (3.735) (283) 5.001 1.042 9,058 81.266 (166,402) 14,538 107,447 (343) 31,775 94,564 (329) (12.451) (344) (395) 220 (46,446) 21.258 90,536 (297) (12.734) (814) (1.388) (110) (45.977) 14,538 107,447 (343) (11.247) (241) (26) (56,274) Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments made in connection with business acquisitions, net Payments for acquisition of property, plant and equipment Payments for acquisition of intangible assets Payments for strategic investments, net Other Cash used in investing activities Financing activities Proceeds from issuance of common stock Excess tax benefits from equity awards Payments for taxes related to net share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from issuance of term debt, net Repayments of term debt Change in commercial paper, net Cash used in financing activities Increase (decrease in cash and cash equivalents Cash and cash equivalents, end of the year Supplemental cash flow disclosure Cash paid for income taxes, net Cash paid for interest SSS 627 (1,874) (12.769) (32,900) 28.662 (3,500) 3,852 (17.347) (195 20.289 495 407 (1.570) (12.150) (29,722) 24,954 (2.500) (397) (20,483) (636) 20,484 543 749 (1.499) (11.561) (35.253) 27.114 2.191 (17,716) 7.276 21.120 s S S $ 11.591 2,092 10.444 1.316 13.252 514 S S Sce accompanying Notes to Consolidated Financial Statements