Case 2: Apple year end 9/25/21 - Read All Instructions i 32 Saved This question will be sent to your instruc Inventory Turnover and Days' Sales in Inventory (text book pages 501-502, 505) a. Calculate the Inventory Turnover ratio. (SHOW YOUR WORK. Calculate ratio to three decimal places.) 18 points b. Calculate the Days' Sales in Inventory ratio. (SHOW YOUR WORK. Calculate ratio to three decimal places.) Does this ratio appear favorable or unfavorable? Why? Skipped Case 2: Apple year end 9/25/21 - Read All Instructions Saved This question will be sent to you Total Asset Turnover (text book pages 502, 505) 33 Calculate the Total Asset Turnover ratio. (SHOW YOUR WORK. Calculate ratio to three decimal places.) Case 2: Apple year end 9/25/21 - Read All Instructions i 34 Debt Ratio: (text book pages 502-503, 505) This question wi a. Calculate the Debt ratio. (SHOW YOUR WORK. Calculate ratio to three decimal places.) b. What does this ratio tell you about Apple's risk? Case 2: Apple year end 9/25/21 - Read All Instructions 35 Debt-to-Equity Ratio: (text book pages 502-503, 505) Saved This question will be sent to yo a. Calculate the Debt-to-Equity ratio. (SHOW YOUR WORK. Calculate ratio to three decimal places.) b. What does this ratio tell you about Apple's capital structure and risk? Case 2: Apple year end 9/25/21 - Read All Instructions Saved This question will be sent to your instructor for grading. 20 36 points Skipped Market Price, Dividend Yield & Price-Earnings Ratios (pages 504-505) a. What is the current market price of the stock? (Give the date that you found this price). (This is not in the financial statements provided.) It is noted on Apple's website or go to www.yahoofinance.com to get the quote. The ticker symbol for Apple is AAPL. b. Calculate the Dividend Yield. (SHOW YOUR WORK. Calculate ratio to three decimal places.) c. Calculate the Price-Earnings Ratio. (SHOW YOUR WORK. Calculate ratio to three decimal places.) d, If analysts give a range of higher than 20-25 for a stock to be considered overpriced and less than 5-8 for a stock to be considered underpriced, how is Apple doing? Case 2: Apple year end 9/25/21 - Read All Instructions 37 Summary: Saved This question will be sent to your instructor for grading. Help Save & Exit Sul Your superior asks you to analyze Apple's financial condition (liquidity, efficiency, solvency, profitability) based on the financial statements and ratios presented in this case. Would you recommend it as a worthy investment (yes or no? Support your opinion using five answers from questions #29 -36 above. Your response should be at least 5-6 sentences. + Net sales: Products Services Total net sales Cost of sales: Products Services Total cost of sales Grossmargin Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) $ September 25, 2021 297,392 68,425 $ 365,817 Years ended September 26, 2020 September 28, 2019 220,747 53,768 $ 213,883 46,291 Current assets: Cash and cash equivalents 274,515 260,174 Marketable securities Accounts receivable,net Inventories Vendornon-trade receivables 192,266 151,286 144,996 Other current assets 20,715 18,273 16,786 Total current assets 212,981 169,559 161,782 152,836 104,956 98,392 Non-current assets: Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) Operating expenses: Marketable securities Property, plant and equipment, net Research and development 21,914 18,752 16,217 Other non-current assets Selling, general and administrative 21,973 19,916 18,245 Total operating expenses 43,887 38,668 34,462 Total non-current assets Total assets Operating income 66.288 63,930 108,949 Current liabilities: Other income/(expense), net 258 803 1,807 Accounts payable Income before provision for incometaxes 109,207 67,091 65,737 Other current liabilities Provision for incometaxes 14,527 9,680 10,481 Deferred revenue Net income 94,680 $ 57,411 $ 55,256 Commercial paper Term debt Earnings per share: Basic Total current liabilities Diluted Shares used in computing earnings per share: Basic Diluted ASSETS: LIABILITIES AND SHAREHOLDERS' EQUITY: September 25, 2021 September 26, 2020 $ 34,940 $ 27,699 38,016 52,927 26,278 16,120 6,580 4,061 25,228 21,325 14,111 11,264 134,836 143,713 127,877 100,887 39,440 36,766 48,849 42,522 216,166 351,002 180,175 $ 323,888 54,763 $ 42,296 47,493 42,684 7,612 6,643 6,000 4,996 9,613 8,773 125,481 105,392 5.67 $ 5.61 $ 3.31 $ 3.28 $ 2.99 2.97 Non-current liabilities: Term debt 109,106 98,667 16,701,272 16,864,919 17,352,119 17,528,214 18,471,336 18,595,651 Other non-current liabilities 53,325 54,490 Total non-current liabilities 162,431 153,157 See accompanying Notes to Consolidated Financial Statements. Total liabilities 287,912 258,549 Apple Inc. | 2021 Form 10-K|29 Shareholders' equity. Common stock and additional paid-in capital, $0.00001 par value: 50,400,000 shares authorized; 16,426,786 and 16,976,763 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income/(loss) Applenic. Apple Inc. | 2021 Form 10-K|31 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except per share amounts) 57,365 5,562 50,779 14,966 163 (406) Total shareholders' equity, beginning balances September 25, 2021 Years ended September 26, 2020 September 28, 2019 $ 65,339 $ 90,488 $ 107,147 Total shareholders' equity 63,090 65,339 Common stock and additional paid-in capital: Total liabilities and shareholders' equity $ 351,002 $ 323,888 Beginningbalances 50,779 45,174 40,201 See accompanying Notes to Consolidated Financial Statements. Common stock issued 1,105 880 781 Common stock withheld related to net share settlement of equity awards (2,627) (2,250) (2,002) Share-based compensation 8,108 6,975 6,194 Ending balances 57,365 50,779 45,174 Retained earnings: Beginning balances 14,966 45,898 70,400 Net income 94,680 57,411 55,256 Dividends and dividend equivalents dedared (14,431) (14,087) (14,129) Common stock withheld related to net share settlement of equity awards (4,151) (1,604) (1,029) Common stock repurchased (85,502) (72,516) (67,101) Cumulative effects of changes in accounting principles (136) 2,501 Ending balances 5,562 14,966 45,898 Accumulated other comprehensive income/(loss): Beginningbalances Other comprehensive income/(loss) Cumulative effects of changes in accounting principles Ending balances Total shareholders' equity, ending balances (406) (584) (3,454) 569 42 136 2,781 89 163 (406) (584) $ 63,090 $ 65,339 $ 90,488 Dividends and dividend equivalents dedared per share or RSU $ 0.85 $ 0.795 $ 0.75 See accompanying Notes to Consolidated Financial Statements. Apple Inc. | 2021 Form 10-K|32 Note 1 - Summary of Significant Accounting Policies Basis of Presentation and Preparation Apple Inc. Notesto Consolidated Financial Statements The consolidated financial statements include the accounts of Apple Inc. and its wholly owned subsidiaries (collectively "Apple" or the "Company"). Intercompany accounts and transactions have been eliminated. In the opinion ofthe Company's management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation ofthese consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. Certain prior period amounts in the consolidated financial statements and accompanying notes have been reclassified to conform to the current period's presentation. The Company's fiscal year is the 52-or 53-week period that ends on the last Saturday of September. An additional week is included in the first fiscal quarter every five or six years to realignthe Company's fiscal quarters with calendar quarters. The Company's fiscal years 2021,2020 and 2019 spanned 52 weeks each. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company's fiscal years ended in September and the associated quarters, months and periods ofthose fiscal years. Recently Adopted Accounting Pronouncements Financial Instruments Credit Losses At the beginning ofthe first quarter of 2021, the Company adopted the Financial Accounting Standards Board's (the "F ASB") Accounting Standards Update ("ASU") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which modifies the measurement of expected credit losses on certain financial instruments. The Company adopted ASU 2016-13 utilizing the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on the Company's condensed consolidated financial statements. Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Share-Based Compensation The Company generally measures share-based compensation based on the closing price oftheCompany's common stock on the date of grant, and recognizes expense on a straight-line basis for its estimate of equity awards that will ultimately vest. Further information regarding share-based compensation can be found in Note 9, "Benefit Plans." Earnings Per Share Apple Inc. The Company applies the treasury stock method to determine the dilutive effect of potentially dilutive securities. Potentially dilutive securities representing 62 million shares of common stock were excluded from the computation of diluted earnings per share for 2019 because their effect would have been antidilutive. Cash Equivalents and Marketable Securities All highly liquid investments with maturities ofthree months or less at the date of purchase are classified as cash equivalents. The Company's investments in marketable debt securities have been classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument's underlying contractual maturity date. Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized in other comprehensive income/(loss) ("OCI"). The Company's investments in marketable equity securities are classified based on the nature of the securities and their availability for use in curent operations. The Company's marketable equity securities are measured at fair value with gains and losses recognized in other income/(expense), net ("OI&E"). The cost of securities sold is determined using the specific identification method. Inventories Inventories are measured using the first-in, first-out method. Property, Plant and Equipment Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives ofthe assets, which for buildings is the lesser of 40 years or the remaining life of the building; between one and five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease term or useful life for leasehold improvements. Capitalized costs related to internal-use sotware are amortized on a straight-line basis over the estimated useful lives ofthe assets, which range from five to seven years. Depreciation and amortization expense on property and equipment was $9.5 billion, $9.7 billion and $11.3 billion during 2021, 2020 and 2019, respectively. Noncash investing activities involving property, plant and equipment resulted in a net decrease to accounts payable and other current liabilities of $2.9 billion during The following table shows the computation of basic and diluted earnings per share for 2021,2020 and 2019 (net income in millions and shares in thousands) 2021 2020 2019 Numerator: Net income Denominator. Weighted-average basic shares outstanding Effect of dilutive securities Weighted-average diluted shares Basic earnings per share Diluted earnings per share $ 94,680 $ 57,411 $ 55,256 16,701,272 163,647 17,352,119 176,095 18,471,336 124,315 16,864,919 17,528,214 18,595,651 5.67 $ 3.31 $ 2.99 $ 5.61 $ 3.28 $ 2.97 Apple Inc. | 2021 Form 10-K|34