Appendix A Specimen Financial Statements: Apple Inc. Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces, containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system. The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report: Financial Highlights Letter to the Stockholders Management's Discussion and Analysis Financial Statements Notes to the Financial Statements Management's Responsibility for Financial Reporting Management's Report on Internal Control over Financial Reporting Report of Independent Registered Publice Accounting Firm Selected Financial Data The official SFC filing of the annual report is called a Form 10-K, which often omits the public relations pieces found in most standard annual reports. On the following pages, we present Apple Inc.'s financial statements taken from the company's 2017 Form 10-K. The complete Form 10-K, including notes to the financial statements, is available at the company's website Appleine inions, CONSOLIDATED STATEMENTS OF OPERATIONS cepumber of shares which are reflected in thousands and pershare amounts) Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except number of shares which are reflected in thousands and per share amounts) September 24 September 30 *2013** 229.234 141048 88,186 S Net sales Cost of sales Gross margin $ 215.639 131378 84 253 233.715 140.00 93626 Operating expenses Research and development Selling general and administrative Total operating expenses 15261 10.045 14,194 24.239 22.300 71.230 1.25 Operating income Other income expense), net Income before provision for income taxes Provision for income taxes Net Income 61,344 2,745 04.080 15.738 48,351 60.024 1.348 61,372 15.05 72.515 19.121 45.687 S 3194 Earnings per share Basic Diluted Shares used in computing Basic Diluted 5.217.24 5.251.602 5.470.8.20 5.500.281 5.753.421 5.783.000 Cash dividends declared per share 2.405 2.18 $ Cash dividends declared per share 2.18 $ 1.96 - 240 s See accompanying Notes to Consolidated Financial Statements Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) September 26, September 30, 2017 48,351 Years onded September 24, 2015 45,687 2015 63,394 Net income Other comprehensive income foss, Change in foreign currency translation, net of tax effects of $77), 58 and $201. respectively 224 1.315 Change in unrealized gains losses on derivative Instruments Change in fair value of derivatives, net of tax benetlepense of $478), 7) and (441), respectively Adjustment for nedlin e s realized and included in net income, net of tax expense/benefit of $475, 131 and 5630, respectively Total change in unrealized gains losses on derivative Instruments, not of tax 2.005 (1477) (3.497) (162 (782) Change in unrealized gainslosses on marketable securities Change in fair value of marketable securities, nef of tax benefxpense of $425, (86) and $264, respectively Adjustment for not ansiosos realized and included in not income, not of expense one of $35, 5(31) and (32), respectively Tour change in unrealed gansosses on market securities, not of a 1.582 (483) (846) 1,633 (424) 979 To other comprehensive incomes) Total comprehensive income (1.427) (784) 47 567 46.666 51.907 Sos companying Notes to consideed Financial Statements Total comprehensive income 47,567 $ 46,666 $ 51,967 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 30, 2017 September 24, 2016 ASSETS: $ Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of $58 and $53, respectively Inventories Vendor non-trade receivables Other current assets Total current assets 20,289 53,892 17,874 4,855 17.799 13,936 128,645 20,484 46,671 15,754 2,132 13,545 8,283 106,869 Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets 194,714 33,783 5,717 2.298 10,162 375,319 170,430 27,010 5,414 3,206 8.757 321,686 $ $ LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable Amado 49,049 $ 37.294 $ Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities 49,049 25.744 7,548 11,977 6,496 100,814 37.294 22,027 8,080 8,105 3,500 79,006 Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities 2,836 97,207 40,415 241,272 2,930 75,427 36,074 193,437 Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, 50.00001 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 35,867 98,330 (150) 134,047 375,319 31.251 96,364 634 128,249 321,686 $ Soo accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in Millions, except number of shares which are reflected in thousands) Common Stock and Additional Paid-in Capital Accumulated Other Comtension Tan Shatholdet CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Common Stock and Additional Paid-in Capital Shares Amount 5,866,161 $ 23,313 Accumulated Other Comprehensive Income (Loss) 1,082 Retained Earnings 87,152 53,394 $ $ (1,427) Total Shareholders' Equity $ 111,547 53,394 (1.427) (11,627) (36,026) 3,586 (325,032) 119 (11,627) (36,026) 37,624 (231) (609) (840) 748 5,578,753 27,416 92,284 45,687 Balances as of September 27, 2014 Net income Other comprehensive income (loss) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, net of shares withhold for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2015 Net income Other comprehensive income/(los) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, not of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 Not income Other comprehensive income (loss) Dividends and dividend equivalents declared Repurchase of common stock 119,355 45,687 979 (12,188) (29,000) 4.262 (12.188) (29,000) (279,609) 262 37 022 (806) (419) (1.225) 379 5.336,166 31,251 96,364 48,351 379 128.249 48 351 (784) (12,803) (33.001) 1784) (246.496) (12,803) (33,001) (246,496) (33,001) (33.001) 4,909 4,909 Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 36,531 (913) (581) (1.494) 620 35,867 620 134,047 5,126,201 $ 98.330 150) $ See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) September 30, 2017 20,484 Years ended September 24, 2016 21,120 September 26, 2015 13,844 $ $ $ 48,351 45,687 53,304 Cash and cash equivalents, beginning of the year Operating activities: Not 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 Inventories Vendor non-trade receivables Other current and non-current assets Accounts payable 10,157 4,140 5.966 (168) 10.505 4,210 4,938 11.257 3.56 1.382 385 (2,093) (2.723) (4,254) (5.318) 9,618 417 (238) (3.735) (51) 1,055 1.837 5.001 9,618 1,837 (1,554) 2.033) 65 824 5,001 1,042 9,058 81.266 (142428) 21.258 90,536 (297) (12,734) (814) (1,388) (110) (45.977) (168,402) 14,538 107,447 (343) (11,247) (241) (344) 220 (46.446) (26) (58.274) Accounts payable Deferred revenue (626) Other current and non-current liabilities (154) Cash generated by operating activities 63,598 Investing activities: Purchases of marketable securities (159,485) Proceeds from maturities of marketable securities 31.775 Proceeds from sales of marketable securities 94,584 Payments made in connection with business acquisitions, net (329) Payments for acquisition of property, plant and equipment (12,451) Payments for acquisition of intangible assets Payments for strategic investments, net (395) Other Cash used in investing activities Financing activities: Proceeds from issuance of common stock 555 Excess tax benefits from equity awards Payments for taxes related to not share settlement of equity awards (1,874) Payments for dividends and dividend equivalents (12,700) Ropurchases of common stock (32.900) Proceeds from issuance of term debt, net 28,662 Repayments of term debt (3.500) Change in commercial paper, net 3852 Cash used in financing activities Increase/Decrease in cash and cash equivalents (195) Cash and cash equivalents, end of the year 20,289 Supplemental cash flow disclosure: Cash paid for income taxes, net Cash paid for interest 2,092 See accompanying Notes to Consolidated Financial Statements, 495 543 749 27 407 (1.570) (12,150) (20.722) 24,954 12.500) (397) (20,483) (030) 20.484 (1.490) (11.561) (35,253) 27.114 2.191 (17,716) (17347) 7.276 21,120 $ $ 10.444 1,316 $ $ 13,252 514 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to O decimal places, eg. 15% and enter amounts in millions.) APPLE INC. Trend Analysis of Net Sales and Net Earnings For the Five Years Ended 2017 2017 2015 2014 (1) Net sales $ Trend (2) Net income $ Trend e Textbook and Media . 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to 0 decimal places, es 15% and enter amounts in millions.) arnings 2016 2014 2013 e Textbook and Media Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentages to 0 decimal places, e.g. 15% and times to 1 decimal place, e.g. 15.2.) 2017 2016 Debt to Assets Ratio Times Interest Earned e Textbook and Media Compute for 2017 and 2016 the (1) profit margin. (2) asset turnover, (3) return on assets, and (4) return on common stockholders' equity. Total assets at September 26, 2015, were $290,345 million and total stockholders' equity at September 26, 2015, was $119,355 million. (Round Percentages to 1 decimal places, c.8. 15.2% and all other answers to 2 decimal places, eg. 15.25) 2017 2016 Proft Matgin Asset Turnover Return on Assets Return on Common Stockholders' Equity Appendix A Specimen Financial Statements: Apple Inc. Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system. The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report: Financial Highlights Letter to the Stockholders Management's Discussion and Analysis - Financial Statements Notes to the Financial Statements Management's Responsibility for Financial Reporting Management's Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Selected Financial Data The official SEC filing of the annual report is called a Form 10-K, which often omits the public relations peces found in most standard annual reports. On the following pages, we present Apple Inc.'s financial statements taken from the company's 2017 Form 10-K. The complete Form 10-K, including notes to the financial statements, is available at the company's website Appleine CONSOLIDATED STATEMENTS OF OPERATIONS fin millions, except number of shares which are reflected in thousands and pershare amounts) Years ended Net Costa Grossman 88. 186 4 .263 93.626 Gross margin Operating expenses Research and development Selling general and administrative Total operating expenses 10.045 14,194 24 239 8.067 14,329 22,396 Operating income Other income (expense), net Income before provision for income Provision for income taxes Notcome 61,344 2.745 64,089 15.738 48,351 60.004 1,348 61,372 15.685 45.697 71.230 1.285 72,515 19.121 53,394 $ Earnings per share: Basic 9.28 9.22 Diluted Shares used in computing Basic Diluted 5.470.620 5.500.281 5.753,421 5.793.000 Cash dividende declared por share 1.98 See accompanying Notes to Consolidated Financial Statements Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) ember. September 20 45.687 53.394 Not income Other comprehensive income (loss}; Change in foreign currency translation, net of tax effects of S[77) $8 and $201. respectively September 30 Years ended September 24, 2016 45,687 September 26, 2015 53.394 48,351 $ Net income Other comprehensive income/(loss): Change in foreign currency translation, net of tax effects of $(77). $8 and $201. respectively 1.315 2.905 Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of $(478). S17) and $(441), respectively Adjustment for not (gains) losses realized and included in net income, net of tax expense/benefit of $475, $131 and $630, respectively Total change in unrealized gains/losses on derivative Instruments, net of tax (1,477) (162) (3.497) (592) (734) (782) 1,582 (483) Change in unrealized gains/losses on marketable securities Change in fair value of marketable securities, net of tax benefit (expense) of $425, $(863) and $264, respectively Adjustment for not (gains Mosses realized and included in net income, net of tax expense/benefit of $35, S(31) and $(32), respectively Total change in unrealized gains losses on marketable securities, net of tax 56 59 (64) (846) 1.638 (424) (784) 979 Total other comprehensive income (los) Total comprehensive income (1,427) 51.967 47.547 46.666 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED BALANCE SHEETS (in millions, except number of shares which are reflected in thousands and par value) September 30, 2017 September 24, 2016 ASSETS: $ Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of $58 and $53, respectively 20,289 53,892 17,874 20,484 46,671 15.754 Vendor non-trade receivables Other current assets Total current assets 17.799 13,936 128,645 13,545 8.283 106,869 Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets 194,714 33,783 5.717 2,298 10.162 170,430 27.010 5,414 3.206 8,757 321,686 375,319 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities 49,049 25,744 7,548 11.977 6,496 100,814 37.294 22,027 8,080 8,105 3,500 79,006 Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities 2.836 97.207 40,415 241.272 2.930 75,427 36,074 Commitments and contingencies Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized 5,126,201 and 5,336,166 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive incoma/(loss) 35,867 98,330 (150) 31.251 96,364 634 Accumulated oiher comprehensive income (1088) Total shareholders' equity Total liabilities and shareholders' equity (150) 134,047 375,319 634 128,249 321,686 $ S 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) Common Stock and Additional Paid-in Capital Shares Amount 5.46.161 S 23,313 Accumulated Other Comprehensive Income (Loss) 1,082 Retained Earnings 87,152 53,394 S $ (1.427) Total Shareholders Equity $ 111,547 53,394 (1.427) (11.627) (36,026) 3,586 (11,627) 1959 (36,026) (609) (840) Balances as of September 27, 2014 Net income Other comprehensive income/(loss) Dividends and dividend equivalents declared Ropurchase of common stock Share-based compensation Common stock issued, not of shares withhold for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2015 Net income Other comprehensive income/(loss) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 92,284 45,687 748 119,355 45,687 979 (12,188) (29,000) 4,262 (279,609) (12,188) (29,000) 37,022 (806) (419) (1.225) 379 5,336,166 ,251 379 128,249 96,364 5,336,166 31,251 634 96,364 48,351 (784) Balances as of September 24, 2016 Net income Other comprehensive income/(loss) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 (246,496) 128 249 48,351 (784) (12,803) (33.001) 4,909 (12,803) (33,001) 4,909 36,531 (913) (581) (1.494) 5,126,201 S 35,867 620 134,047 $ 98,330 $ (150) $ See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS milions) Years ended September 24, September 30. September 26, 2015 20,484 21,120 13844 48.351 45,687 53,394 Cash and cash equivalents, beginning of the year Operating activities Not 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, not Inventories Vendor non-trade receivables Other current and non-current assets 10,157 4,840 5,966 (166) 10.505 4.210 4,938 11,257 3,586 486 (2,093) (2,723) (4.254) (5,318) 527 217 (51) 1,055 417 (238) (3.735) (283) (3.735) 1.055 1,837 (1.654) 12.033) 5524 5,001 1,042 9,058 81.266 (142,428) 21.258 90,536 (297) (12,734) (814) (1,388) (110) 145.077 (166,402) 14,538 107 447 (343) (11.247) (241) (6274) Vendor non-trado receivables (4.254) Other current and non-current assets (5,318) Accounts payable 9,618 Deferred revenue (626) Other current and non-current liabilities (154) Cash generated by operating activities 63.598 Investing activities Purchases of marketable securities (159,486) Proceeds from maturities of marketable securities 31.775 Proceeds from sales of marketable securities 94.564 Payments made in connection with business acquisitions, net (329) Payments for acquisition of property, plant and equipment (12.451) Payments for acquisition of intangible assets (344) Payments for strategic investments, net (395) Other Cash used in investing activities (46.445) Financing activities Proceeds from issuance of common stock Excess tax benefits from equity awards Payments for related to not share solement of equity awards (1.874) Payments for dividends and dividend equivalents (12.760) Repurchases of common stock (32,900) Proceeds from stance of term debt, net 28.662 Repayments of form debit (3.500) Change in commercial paper, net 3,852 Cash used in financing activities (17.347) Increase/Decrease in cash and cash equivalents (195) Cash and cash equivalents, end of the year $ 20.289 Supplemental cash flow disclosure Cash paid for income taxes, net $ 11.501 Cash paid for interest 2.092 e accompanying Notes to Consolidated Financial Statements 555 543 740 495 407 11.570) (12,150) (29,722) 24.954 (2,500) (397 (20.483) (1.490) (11,561) (35.253) 27.114 2.191 $ 20.484 S 13.252 10,444 1.316 s 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to decimal places, e.g. 15% and enter amounts in millions.) APPLE INC Trend Analysis of Net Sales and Net Earnings Forkhe Five Years Ended 2017 2014 2017 $ (1) Net sales Trend (2) Net Income $ Trend e Textbook and Media Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentages to decimal places, eg. 15% and times to 1 decimal place, eg. 15.2.) MacBook Pro 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to o decimal places, e.g. 15% and enter amounts in millions.) es and Net Earnings 2017 2016 2015 2014 2013 e Textbook and Media Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentages to decimal places, eg. 15% and times to 1 decimal place, eg. 15.2.) decimal places . 15% and times to Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentaresto decimal place, ex 15.2) 2017 2016 Debt to Assets Ratio Times Interest Earned e Textbook and Media Compute for 2017 and 2016 the (1) profit margin, (2) asset turnover, (3) return on assets, and (4) return on common stockholders' equity. Total assets at September 26, 2015, were $290,345 million and total stockholders equity at September 26, 2015. was $119,355 million. (Round Percentages to 1 decimal places, 68.15.2% and all other answers to 2 decimal places. 15.25.) Profit Margin Asset Turnover Return on Assets Return on Common Stockholders' Equity e Textbook and Media MacBook Pro Appendix A Specimen Financial Statements: Apple Inc. Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces, containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system. The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report: Financial Highlights Letter to the Stockholders Management's Discussion and Analysis Financial Statements Notes to the Financial Statements Management's Responsibility for Financial Reporting Management's Report on Internal Control over Financial Reporting Report of Independent Registered Publice Accounting Firm Selected Financial Data The official SFC filing of the annual report is called a Form 10-K, which often omits the public relations pieces found in most standard annual reports. On the following pages, we present Apple Inc.'s financial statements taken from the company's 2017 Form 10-K. The complete Form 10-K, including notes to the financial statements, is available at the company's website Appleine inions, CONSOLIDATED STATEMENTS OF OPERATIONS cepumber of shares which are reflected in thousands and pershare amounts) Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except number of shares which are reflected in thousands and per share amounts) September 24 September 30 *2013** 229.234 141048 88,186 S Net sales Cost of sales Gross margin $ 215.639 131378 84 253 233.715 140.00 93626 Operating expenses Research and development Selling general and administrative Total operating expenses 15261 10.045 14,194 24.239 22.300 71.230 1.25 Operating income Other income expense), net Income before provision for income taxes Provision for income taxes Net Income 61,344 2,745 04.080 15.738 48,351 60.024 1.348 61,372 15.05 72.515 19.121 45.687 S 3194 Earnings per share Basic Diluted Shares used in computing Basic Diluted 5.217.24 5.251.602 5.470.8.20 5.500.281 5.753.421 5.783.000 Cash dividends declared per share 2.405 2.18 $ Cash dividends declared per share 2.18 $ 1.96 - 240 s See accompanying Notes to Consolidated Financial Statements Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) September 26, September 30, 2017 48,351 Years onded September 24, 2015 45,687 2015 63,394 Net income Other comprehensive income foss, Change in foreign currency translation, net of tax effects of $77), 58 and $201. respectively 224 1.315 Change in unrealized gains losses on derivative Instruments Change in fair value of derivatives, net of tax benetlepense of $478), 7) and (441), respectively Adjustment for nedlin e s realized and included in net income, net of tax expense/benefit of $475, 131 and 5630, respectively Total change in unrealized gains losses on derivative Instruments, not of tax 2.005 (1477) (3.497) (162 (782) Change in unrealized gainslosses on marketable securities Change in fair value of marketable securities, nef of tax benefxpense of $425, (86) and $264, respectively Adjustment for not ansiosos realized and included in not income, not of expense one of $35, 5(31) and (32), respectively Tour change in unrealed gansosses on market securities, not of a 1.582 (483) (846) 1,633 (424) 979 To other comprehensive incomes) Total comprehensive income (1.427) (784) 47 567 46.666 51.907 Sos companying Notes to consideed Financial Statements Total comprehensive income 47,567 $ 46,666 $ 51,967 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 30, 2017 September 24, 2016 ASSETS: $ Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of $58 and $53, respectively Inventories Vendor non-trade receivables Other current assets Total current assets 20,289 53,892 17,874 4,855 17.799 13,936 128,645 20,484 46,671 15,754 2,132 13,545 8,283 106,869 Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets 194,714 33,783 5,717 2.298 10,162 375,319 170,430 27,010 5,414 3,206 8.757 321,686 $ $ LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable Amado 49,049 $ 37.294 $ Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities 49,049 25.744 7,548 11,977 6,496 100,814 37.294 22,027 8,080 8,105 3,500 79,006 Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities 2,836 97,207 40,415 241,272 2,930 75,427 36,074 193,437 Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, 50.00001 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 35,867 98,330 (150) 134,047 375,319 31.251 96,364 634 128,249 321,686 $ Soo accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in Millions, except number of shares which are reflected in thousands) Common Stock and Additional Paid-in Capital Accumulated Other Comtension Tan Shatholdet CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Common Stock and Additional Paid-in Capital Shares Amount 5,866,161 $ 23,313 Accumulated Other Comprehensive Income (Loss) 1,082 Retained Earnings 87,152 53,394 $ $ (1,427) Total Shareholders' Equity $ 111,547 53,394 (1.427) (11,627) (36,026) 3,586 (325,032) 119 (11,627) (36,026) 37,624 (231) (609) (840) 748 5,578,753 27,416 92,284 45,687 Balances as of September 27, 2014 Net income Other comprehensive income (loss) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, net of shares withhold for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2015 Net income Other comprehensive income/(los) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, not of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 Not income Other comprehensive income (loss) Dividends and dividend equivalents declared Repurchase of common stock 119,355 45,687 979 (12,188) (29,000) 4.262 (12.188) (29,000) (279,609) 262 37 022 (806) (419) (1.225) 379 5.336,166 31,251 96,364 48,351 379 128.249 48 351 (784) (12,803) (33.001) 1784) (246.496) (12,803) (33,001) (246,496) (33,001) (33.001) 4,909 4,909 Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 36,531 (913) (581) (1.494) 620 35,867 620 134,047 5,126,201 $ 98.330 150) $ See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) September 30, 2017 20,484 Years ended September 24, 2016 21,120 September 26, 2015 13,844 $ $ $ 48,351 45,687 53,304 Cash and cash equivalents, beginning of the year Operating activities: Not 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 Inventories Vendor non-trade receivables Other current and non-current assets Accounts payable 10,157 4,140 5.966 (168) 10.505 4,210 4,938 11.257 3.56 1.382 385 (2,093) (2.723) (4,254) (5.318) 9,618 417 (238) (3.735) (51) 1,055 1.837 5.001 9,618 1,837 (1,554) 2.033) 65 824 5,001 1,042 9,058 81.266 (142428) 21.258 90,536 (297) (12,734) (814) (1,388) (110) (45.977) (168,402) 14,538 107,447 (343) (11,247) (241) (344) 220 (46.446) (26) (58.274) Accounts payable Deferred revenue (626) Other current and non-current liabilities (154) Cash generated by operating activities 63,598 Investing activities: Purchases of marketable securities (159,485) Proceeds from maturities of marketable securities 31.775 Proceeds from sales of marketable securities 94,584 Payments made in connection with business acquisitions, net (329) Payments for acquisition of property, plant and equipment (12,451) Payments for acquisition of intangible assets Payments for strategic investments, net (395) Other Cash used in investing activities Financing activities: Proceeds from issuance of common stock 555 Excess tax benefits from equity awards Payments for taxes related to not share settlement of equity awards (1,874) Payments for dividends and dividend equivalents (12,700) Ropurchases of common stock (32.900) Proceeds from issuance of term debt, net 28,662 Repayments of term debt (3.500) Change in commercial paper, net 3852 Cash used in financing activities Increase/Decrease in cash and cash equivalents (195) Cash and cash equivalents, end of the year 20,289 Supplemental cash flow disclosure: Cash paid for income taxes, net Cash paid for interest 2,092 See accompanying Notes to Consolidated Financial Statements, 495 543 749 27 407 (1.570) (12,150) (20.722) 24,954 12.500) (397) (20,483) (030) 20.484 (1.490) (11.561) (35,253) 27.114 2.191 (17,716) (17347) 7.276 21,120 $ $ 10.444 1,316 $ $ 13,252 514 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to O decimal places, eg. 15% and enter amounts in millions.) APPLE INC. Trend Analysis of Net Sales and Net Earnings For the Five Years Ended 2017 2017 2015 2014 (1) Net sales $ Trend (2) Net income $ Trend e Textbook and Media . 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to 0 decimal places, es 15% and enter amounts in millions.) arnings 2016 2014 2013 e Textbook and Media Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentages to 0 decimal places, e.g. 15% and times to 1 decimal place, e.g. 15.2.) 2017 2016 Debt to Assets Ratio Times Interest Earned e Textbook and Media Compute for 2017 and 2016 the (1) profit margin. (2) asset turnover, (3) return on assets, and (4) return on common stockholders' equity. Total assets at September 26, 2015, were $290,345 million and total stockholders' equity at September 26, 2015, was $119,355 million. (Round Percentages to 1 decimal places, c.8. 15.2% and all other answers to 2 decimal places, eg. 15.25) 2017 2016 Proft Matgin Asset Turnover Return on Assets Return on Common Stockholders' Equity Appendix A Specimen Financial Statements: Apple Inc. Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. The annual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system. The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report: Financial Highlights Letter to the Stockholders Management's Discussion and Analysis - Financial Statements Notes to the Financial Statements Management's Responsibility for Financial Reporting Management's Report on Internal Control over Financial Reporting Report of Independent Registered Public Accounting Firm Selected Financial Data The official SEC filing of the annual report is called a Form 10-K, which often omits the public relations peces found in most standard annual reports. On the following pages, we present Apple Inc.'s financial statements taken from the company's 2017 Form 10-K. The complete Form 10-K, including notes to the financial statements, is available at the company's website Appleine CONSOLIDATED STATEMENTS OF OPERATIONS fin millions, except number of shares which are reflected in thousands and pershare amounts) Years ended Net Costa Grossman 88. 186 4 .263 93.626 Gross margin Operating expenses Research and development Selling general and administrative Total operating expenses 10.045 14,194 24 239 8.067 14,329 22,396 Operating income Other income (expense), net Income before provision for income Provision for income taxes Notcome 61,344 2.745 64,089 15.738 48,351 60.004 1,348 61,372 15.685 45.697 71.230 1.285 72,515 19.121 53,394 $ Earnings per share: Basic 9.28 9.22 Diluted Shares used in computing Basic Diluted 5.470.620 5.500.281 5.753,421 5.793.000 Cash dividende declared por share 1.98 See accompanying Notes to Consolidated Financial Statements Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) ember. September 20 45.687 53.394 Not income Other comprehensive income (loss}; Change in foreign currency translation, net of tax effects of S[77) $8 and $201. respectively September 30 Years ended September 24, 2016 45,687 September 26, 2015 53.394 48,351 $ Net income Other comprehensive income/(loss): Change in foreign currency translation, net of tax effects of $(77). $8 and $201. respectively 1.315 2.905 Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of $(478). S17) and $(441), respectively Adjustment for not (gains) losses realized and included in net income, net of tax expense/benefit of $475, $131 and $630, respectively Total change in unrealized gains/losses on derivative Instruments, net of tax (1,477) (162) (3.497) (592) (734) (782) 1,582 (483) Change in unrealized gains/losses on marketable securities Change in fair value of marketable securities, net of tax benefit (expense) of $425, $(863) and $264, respectively Adjustment for not (gains Mosses realized and included in net income, net of tax expense/benefit of $35, S(31) and $(32), respectively Total change in unrealized gains losses on marketable securities, net of tax 56 59 (64) (846) 1.638 (424) (784) 979 Total other comprehensive income (los) Total comprehensive income (1,427) 51.967 47.547 46.666 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED BALANCE SHEETS (in millions, except number of shares which are reflected in thousands and par value) September 30, 2017 September 24, 2016 ASSETS: $ Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of $58 and $53, respectively 20,289 53,892 17,874 20,484 46,671 15.754 Vendor non-trade receivables Other current assets Total current assets 17.799 13,936 128,645 13,545 8.283 106,869 Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets 194,714 33,783 5.717 2,298 10.162 170,430 27.010 5,414 3.206 8,757 321,686 375,319 LIABILITIES AND SHAREHOLDERS' EQUITY: Current liabilities: Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities 49,049 25,744 7,548 11.977 6,496 100,814 37.294 22,027 8,080 8,105 3,500 79,006 Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities 2.836 97.207 40,415 241.272 2.930 75,427 36,074 Commitments and contingencies Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized 5,126,201 and 5,336,166 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive incoma/(loss) 35,867 98,330 (150) 31.251 96,364 634 Accumulated oiher comprehensive income (1088) Total shareholders' equity Total liabilities and shareholders' equity (150) 134,047 375,319 634 128,249 321,686 $ S 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) Common Stock and Additional Paid-in Capital Shares Amount 5.46.161 S 23,313 Accumulated Other Comprehensive Income (Loss) 1,082 Retained Earnings 87,152 53,394 S $ (1.427) Total Shareholders Equity $ 111,547 53,394 (1.427) (11.627) (36,026) 3,586 (11,627) 1959 (36,026) (609) (840) Balances as of September 27, 2014 Net income Other comprehensive income/(loss) Dividends and dividend equivalents declared Ropurchase of common stock Share-based compensation Common stock issued, not of shares withhold for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2015 Net income Other comprehensive income/(loss) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 92,284 45,687 748 119,355 45,687 979 (12,188) (29,000) 4,262 (279,609) (12,188) (29,000) 37,022 (806) (419) (1.225) 379 5,336,166 ,251 379 128,249 96,364 5,336,166 31,251 634 96,364 48,351 (784) Balances as of September 24, 2016 Net income Other comprehensive income/(loss) Dividends and dividend equivalents declared Repurchase of common stock Share-based compensation Common stock issued, net of shares withheld for employee taxes Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 (246,496) 128 249 48,351 (784) (12,803) (33.001) 4,909 (12,803) (33,001) 4,909 36,531 (913) (581) (1.494) 5,126,201 S 35,867 620 134,047 $ 98,330 $ (150) $ See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS milions) Years ended September 24, September 30. September 26, 2015 20,484 21,120 13844 48.351 45,687 53,394 Cash and cash equivalents, beginning of the year Operating activities Not 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, not Inventories Vendor non-trade receivables Other current and non-current assets 10,157 4,840 5,966 (166) 10.505 4.210 4,938 11,257 3,586 486 (2,093) (2,723) (4.254) (5,318) 527 217 (51) 1,055 417 (238) (3.735) (283) (3.735) 1.055 1,837 (1.654) 12.033) 5524 5,001 1,042 9,058 81.266 (142,428) 21.258 90,536 (297) (12,734) (814) (1,388) (110) 145.077 (166,402) 14,538 107 447 (343) (11.247) (241) (6274) Vendor non-trado receivables (4.254) Other current and non-current assets (5,318) Accounts payable 9,618 Deferred revenue (626) Other current and non-current liabilities (154) Cash generated by operating activities 63.598 Investing activities Purchases of marketable securities (159,486) Proceeds from maturities of marketable securities 31.775 Proceeds from sales of marketable securities 94.564 Payments made in connection with business acquisitions, net (329) Payments for acquisition of property, plant and equipment (12.451) Payments for acquisition of intangible assets (344) Payments for strategic investments, net (395) Other Cash used in investing activities (46.445) Financing activities Proceeds from issuance of common stock Excess tax benefits from equity awards Payments for related to not share solement of equity awards (1.874) Payments for dividends and dividend equivalents (12.760) Repurchases of common stock (32,900) Proceeds from stance of term debt, net 28.662 Repayments of form debit (3.500) Change in commercial paper, net 3,852 Cash used in financing activities (17.347) Increase/Decrease in cash and cash equivalents (195) Cash and cash equivalents, end of the year $ 20.289 Supplemental cash flow disclosure Cash paid for income taxes, net $ 11.501 Cash paid for interest 2.092 e accompanying Notes to Consolidated Financial Statements 555 543 740 495 407 11.570) (12,150) (29,722) 24.954 (2,500) (397 (20.483) (1.490) (11,561) (35.253) 27.114 2.191 $ 20.484 S 13.252 10,444 1.316 s 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to decimal places, e.g. 15% and enter amounts in millions.) APPLE INC Trend Analysis of Net Sales and Net Earnings Forkhe Five Years Ended 2017 2014 2017 $ (1) Net sales Trend (2) Net Income $ Trend e Textbook and Media Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentages to decimal places, eg. 15% and times to 1 decimal place, eg. 15.2.) MacBook Pro 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 presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website. Click here to view Appendix A. Answer the following questions. Make a 5-year trend analysis, using 2013 as the base year, of (1) net sales and (2) net income. (Round percentages to o decimal places, e.g. 15% and enter amounts in millions.) es and Net Earnings 2017 2016 2015 2014 2013 e Textbook and Media Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentages to decimal places, eg. 15% and times to 1 decimal place, eg. 15.2.) decimal places . 15% and times to Compute for 2017 and 2016 the (1) debt to assets ratio and (2) times interest earned. (Round percentaresto decimal place, ex 15.2) 2017 2016 Debt to Assets Ratio Times Interest Earned e Textbook and Media Compute for 2017 and 2016 the (1) profit margin, (2) asset turnover, (3) return on assets, and (4) return on common stockholders' equity. Total assets at September 26, 2015, were $290,345 million and total stockholders equity at September 26, 2015. was $119,355 million. (Round Percentages to 1 decimal places, 68.15.2% and all other answers to 2 decimal places. 15.25.) Profit Margin Asset Turnover Return on Assets Return on Common Stockholders' Equity e Textbook and Media MacBook Pro