Accounting practice problem 15

Use the table below and Apple's financial statements in Appendix A to answer the following. $ millions Interest expense 2017 2016 $2,323 $1,456 2015 $733 Required: 1. Compute times interest earned for each of the three years shown. 2. Is Apple in a good or bad position to pay interest obligations? Assume an industry average of 10. 3. Identify Apple's total accrued expenses in 2017. Complete this question by entering your answers the tabs below. Required 1 Required 2 Required 3 Compute times interest earned for each of the three years shown. (Round your answer to 2 decimal places.) 2017 2016 2015 Times interest eamed ratio Required 2 > Use the table below and Apple's financial statements in Appendix A to answer the following. S millions Interest expense 2017 2016 $2,323 $1,456 2015 $ 733 Required: 1. Compute times interest earned for each of the three years shown. 2. Is Apple in a good or bad position to pay interest obligations? Assume an industry average of 10. 3. Identify Apple's total accrued expenses in 2017. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Is Apple in a good or bad position to pay interest obligations? Assume an industry average of 10. Is Apple in a good or bad position? Use the table below and Apple's financial statements in Appendix A to answer the following. $ millions Interest expense 2017 $2,323 2016 $1,456 2015 $733 Required: 1. Compute times interest earned for each of the three years shown. 2. Is Apple in a good or bad position to pay interest obligations? Assume an industry average of 10. 3. Identify Apple's total accrued expenses in 2017. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Identify Apple's total accrued expenses in 2017. (Enter your answers in millions of dollars.). Apple's total accrued expenses million Required 2 Required 3 Red > APPLE 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 Short-term marketable securities 53.892 Accounts receivable, less allowances of $58 and 553, respectively 17,874 Inventories 4,855 Vendor non-trade receivables 17.799 Other current assets 13.9% Total current assets 128,645 Long-term marketable securities 194,714 Property, plant and equipment, net 33,783 Goodwill 5,717 Acquired intangible assets, not 2.298 Other non-current assets 10,162 Tocal assets 5 375319 20,484 46,671 15,754 2,132 13.545 8,283 106,869 170,430 27010 5.414 3.206 8.757 321.686 49.049 25,744 7.548 37.294 22,027 8,080 8.105 3.500 11.977 6,496 100,814 2.836 79.006 2.00 75.427 36074 97,307 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable 5 Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Deferred revenue, non current Long-term debt Other non-current liabilities Total liabilities Commitments and contingencies Shareholders' equity Common stock and additional paid in capital, 50.00001 per value: 12.500,000 shares Nuthorized: 5.126,201 and 5.336,166 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income (lo) Total shareholders' equity Total liabilities and shareholders equity Comm ... . 40,415 241.272 193,437 35,467 31.251 96,364 98,330 (150) 134.047 375,319 128.249 321,686 $ APF September 26, 2015 $ 233,715 140 DRO 93,626 CONSOLIDATED STATEMENTS OF OPERATIONS In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 20, 2017 September 24, 2016 Net sales $ 229,234 $ 5 215,639 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 14.104 Total operating expenses 26 22 24.239 Operating income 61,344 60,024 Other incon (expense), het 1.148 Income before provision for income taxes 61.372 Provision for income taxes 15,738 15.685 Net income 45.687 8,067 14,329 22.396 71.230 1.285 72.515 19.121 53,394 9.22 Earnings per share 9.29 $ 8.35 Dibuted 9.21 5 831 Shares used in computing carning per share Basic 5.217.242 5470.820 Ditund 5.251,692 5.500.281 Cash dividendi declared per share See accompanying Notes to Consolidated Financial Statements 5.753.421 5.793,069 September 26, 2015 $ 51,394 (411) Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September , 2017 September 24, 2016 Net income 48.13 45.67 Other comprehensive income (lossy Change in foreign currency translation, net of tax effects of 77.5 and 5201, respectively Change in realized anses os derivive instruments Change in fit value of derivatives, net of tax benefit expose) of 4781ST) and 441), respectively Adjustment for not gains) losses realized and included in net income, Oftat expense benefit of $475, 5131 and 56%, respectively (1477) Total change in scalized gains/losses on derivative instruments, net of tax Change in scalized gainstories on marketable secure Change in fair value of marketable securities, net of tax benefit expense) of $425, M63) and 5264, respectively 3,497 (592) U Senents September 26, 2015 $ 53,394 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (la millions) Years ended September 30, 2017 September 24, 2016 Net income $ 48,351 $ 45,687 Other comprehensive income Close Change in foreign currency translation, net of tax effects of 5(77). 58 and 5201, respectively 224 Change in unrealised gins/losses on derivative Instruments: Change in fair value of derivatives, net of tax benefit (expense) of S(478), 5(7) and 5(441), respectively 1.315 Adjustment for net (ans) losses realized and included in net income net of tax expense (benefit of $475, 5131 and 5630, respectively 1,477) Total change in unrealized gains losses on derivative Instruments, net of tax (162) (734) Change in realized gainloses on marketable securities: Change in fair value of marketable securities, net of tax benefit expense) of 5425, 8(863) and $264, respectively (782) 1562 Adjustment for net(gains) losses realized and included in net income net of tax expense benefit of 535,5031), and $(32), respectively Total change in unrealized in losses on marketable securities Det of tax Total other comprehensive income dow) (784) 979 Toulompetensive income 47,567 $ 46.666 See accompanying Notes to Consolidated Financial Statements (3.497 0446) (1.427) 51,957 APPLE 3 Total Shareholders' Equity Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUIT (In millions, except number of shares which are reflected in Accumulated Other Common Stock and Comprehensive Additional Paid-In Capital Retained Income Amount (Loss) Balances as of September 27, 2014 5,866,161 $ 23,313 S 87 Net income 53.394 Other comprehensive income (loss) Dividends and dividend equivalents declared (11,627) Repurchase of common stock (325,032) (36,026) Share-based compensation 3.386 Common stock issued, net of shares withheld for employee taxes 37,624 (231) (609) Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2015 5,578,753 $ 92.284 53.394 (1.427) (11.627) (36,026) 13,586 (840) 748 119.1 45,687 979 (12,188) (29,000) 4,262 (1.225) $ 634 $ Other comprehensive income (loss) Dividends and dividend equivalents declared Repurchase of commin stock (279.609) (29.000 Share-based compensation Common stock issued, set of shares withheld for employee taxes 37.022 (806) (419) Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 5,336,166 $ 31.251s 96,364 Net income 48,351 Other comprehensive income doss) Dividends and dividend equivalents declared (12,803) Repurchase of common stock 046,496) (33,001) Share based compensation Common stock issued, met of shares widheld for employee taxes 36.531 (581) Tax benefit from equity wards, including transfer pricing adjustments Balances as of September 30, 2017 5.126 201 35,867 98330 See accompanying Notes to Consolidated Financial Statements. (784) 379 128,249 48,351 (784) (12,803) (33.001) 4.909 4.909 (913) (1.494) (150) 620 114.047 APPL 2 ISS E A vi 5 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 5 Operating activities: Net Income Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization Share-based compensation expense Deferred income tax expense Other Changes in operating assets and liabilities Accounts receivable, nel levcntoris (2.723) 217 Vendor non-trade receivables (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) (2.031) Cash generated by operating activities 63,598 65.824 Investing 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 O 6 90 536 Payments made in connection with business acquisitions, net (297) Payments for acquisition of property, plant and equipment (12.451) (12.734) (12.734) Promests for acquisition of intangible assets (344) (814) Payments for wrategie investment, nel (395) (1,385) Other (10) Cash used in investing activities 46,446) (45.977 Financing activities Proceeds from issance of common stock 555 Excess tax benefits from equity wards Payments for taxes relMod to net share scitement of equity awards (1.874) Payments for dividends and dividend equivalents (12.709) Repurchases of common stock (32.900) (29.722) Proceeds from issuance of term debi, net 28,662 24,954 Repayments of term debit (3.500) (2.500) Change in commercial paper, net 3.852 Cash used in financing activities (17,347) Increase (decrease) in cash and cashogaivalents 3.735) (283) .001 1.042 9058 81,266 (166,402) 1453 107,447 (343) (11,247 (26) (56.274) 543 719 2 (1.499) (11 561) (35.253) 27.114 2.191 (17,716 7.276