appendix A at the bottom
AA 01-2 Comparative Analysis LO C2 Both Apple and Google (Alphabet) invest in research and development Access each company's 2017 income statement from Arpendix A Required: 1. Compute the ratio of research and development expense to net sales for Apple. 2. Compute the ratio of research and development expense to net sales for Google. 3. Which company spend more (as a percentage of revenue) on research and development? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the ratio of research and development expense to net sales for Apple. (Round your percentage answer to 2 decimal place.) For Apple AA 01-2 Comparative Analysis LO C2 Both Apple and Google (Alphabet) invest in research and development. Access each company's 2017 income statement from Appendix A Required: 1. Compute the ratio of research and development expense to net sales for Apple. 2. Compute the ratio of research and development expense to net sales for Google. 3. Which company spend more (as a percentage of revenue) on research and development? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the ratio of research and development expense to net sales for Google. (Round your percentage answer to 2 decimal place. For Google 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 553, 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, niet 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 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable Accrood expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Defcrred revenue, non current Long-term dicht Other non-current liabilities Total liabilities Commitments and contingencies 49.019 25.744 7.54% 11.977 6,496 100.14 2.836 97.207 10.415 241.272 37.294 22.027 8.080 8.105 3.500 79,00 2.930 75.427 36,074 193.437 Other current assets Total current assets Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets 13,936 128,645 194,714 33,783 5,717 2,298 10,162 375,319 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 revenuc, non-current Long-term deht Other non-current liabilities Total liabilities Commitments and contingencies Shareholders equity Common stock and additional paid-in capital. S0.00001 par value: 12,000,000 shares authorized; 5.126,201 and 5,336,166 shares issued and outstanding, respectively Retained carnings Accumulated other comprehensive income foss) Total shareholder equity Total liabilities and shareholders' equity 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 375319 31.251 56.364 644 128.249 321.686 See accompanying Notos to consolidated Financial Statements September 26, 2015 S 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 8.35 8.31 9.28 9.22 Earnings per share: Basic 9.27 Diluted 9.21 Shares used in computing carnings per share: Basic 5.217.242 Diluted 5.251.6092 Cash dividends declared per share $ 2.40 See accompanying Notes to Consolidated Financial Statements 5.470,820 5,500,281 5.753,421 5,793,069 1.98 2.18 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME In millions) Years ended September 30, 2017 September 21, 2016 September 20, 2015 Net income 18.351 45.687 S 53.194 Other comprehensive income (s): Change in foto andations Cash dividends declared per share 2.40 $ 2.18 $ 1.9 See accompanying Notes to Consolidated Financial Statements. 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 S 53,394 Other comprehensive income (loss): Change in foreign currency translation, net of tax effects of S(77), 58 and 5201, respectively 224 75 (411) Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of S(478). S(7) and S(441), respectively 1.315 7 2.905 Adjustment for net(gains) losses realized and included in net income, net of tax expense (benefit) of $475, $131 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, 8(863) and $264, respectively (7821 1.582 (48) Adjustment for net (gains) Tosses realized and included in net income net of tax expense (benefit of $35. $(31), and S(32), respectively (64) 56 59 Total change in uercalized gains losses on marketable securities. net of tax (816) 1.68 (424) Total other comprehensive income (los) (284 979 (1.427 Total comprehensive income 07:52 16.000 51.96 See accompanying Notes Consolidated Financial Statements S 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 -alances as of September 27, 2014 5,866,161 $ 23,313 $ 87.1525 1,082 S 111.547 Net income 53,394 53,394 Other comprehensive income (loss) (1.427) (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) (810) Tax benefit from equity awards, including transfer pricing adjustments 748 748 Balances as of September 26, 2015 5,578,753 5 27,416 S 92.284 s (345) S 119,355 Net income 45.687 45.687 Other comprehensive Income (los) 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, net of shares withheld for employee taxes 37,022 (806) (419) (1.225 Tax benefit from equity awards, including transfer pricing adjustments 370 379 Balancen as of September 24, 2016 3.146.166 311251 96.164 6315 12010 Net income 18.351 48,351 Other comprehensive income (los) (781) 1784) Dividends and dividend equivalents declared (12.803) (12.803 Repurchase of common stock 24,00 3.001 3001 Share-based compensation . 4.000 Cotton stock inued, neto Share withheld form 1911 (345) $ 979 119,355 45,687 979 (12.188) (29,000) 4.262 (1.225) Balances as of September 26, 2015 5,578,753 $ 27,416 S 92.284 S Net income 45,687 Other comprehensive income (los) Dividends and dividend equivalents declared (12.188) Repurchase of common stock (279.609) (29,000) Share-based compensation 4,262 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 31.251s 96,364 $ Net income 48,351 Other comprehensive income (los) 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 transfer pricing adjustments 620 Balances as of September 30, 2017 5.126,2015 35.862 98 110 See accompanying Notes to Consolidated Financial Statement 6345 (784) . 379 128,249 48,351 (784) [12,803) (33.001) 4,909 (1.494) 620 134.047 S (150) September 26, 2015 13,844 53,394 11,257 3,586 1.382 385 486 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 S 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 1,938 Other (166) 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 15318) 1.055 Accounts payable 9,618 1,837 Defcrred revenue (626) (1.354) Other current and non-current liabilities (154) (2.033) Cash generated by operating activities 63,598 65,824 Investing activities Purchases of marketable securities (39.486) (142.128) Proceeds from maturities of marketable securities 31.775 21.258 Proceeds from sales of marketable securities 94.564 90.536 Payments made in connection with business acquisitions, net (329) 297) Payments for acquisition of property, plant and equipment 12,451 12.7.10) Payments for acquisition of intangible assets 13:15 (814) Payments for strategic investments net 13951 (1.18 Other 220 Cash used in investing activities d66 45.9771 Financing activities 417 (238) (3.735 (283) 5.001 1.012 9,058 81.266 (100.402 1-4.33% 10747 (143 11.24 (241) 110 126 50,27 (154) 63,598 (2,033) 65,824 9,058 81.266 Other current and non-current liabilities Cash generated by operating activities Investing activities: Purchases of marketable securities 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 (159.486) 31.775 94.564 (329) (12.451) (344) (395) 220 (46,446) (142,428) 21,258 90,536 (297) (12.734) (814) (1.388) (110) (45.977) (166,402) 14,538 107,447 (343) (11.247) (241) Other (26 (56,274) 495 543 749 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 555 627 (1.874) (12,769) (32.900) 28,662 (3.500) 3.852 1747 195 20,289 407 (1.570) (12.150) (29,722) 24.954 (2.500) (1.499) (11.561) (35.253) 27.114 (397) 20.483 (636) 20. 2.191 (17.716) 7.276 21120 S Supplemental cash flow disclosure Cash paid for income taxes.net Cash paid for interest 11.30 2.092 $ S 10.4.14 1316 131252 514 See accompanyi Notes to Consolidated Financial Statements
