Chapter 11 Financial Planning Exercise 1 Calculate amount to invest to meet objectives

APPLE INC. NDG-AAPL 212 NOX Prot 1125 1475 888 PE DVD VALUE PRICE Media 130 PERATO YLD LINE TIMELINESS 2 weed 1/18 29.0 286 306 487 610 1007 822 1198 1345 118,7 1772 1942 112 44 55.0 Target Price Range 705 6 185 1148 1502 SAFETY 20 LEGENDS 2021 2022 2023 TECHNICAL 2 2018 Chow Roho Sangh L400 2. 20 BETA 95 11.00 - Market lord -320 2021-23 PROJECTIONS Options les Shaded and An' Total -200 Price Gain Return -160 High 320 (-70% 16% LOW 235 -25% -120 +100 Insider Decisions 180 ASONDJFMA toba 000000000 -60 Optor 3010 00 08 09 tos 6 0 2 2 1 1 0 0 3 40 Institutional Decisions TOT. RETURN 5/18 17 OTP THE VLARITA STOCK 858 1010 Ty 24.2 14.3 to sell 1361 1200 Sy 51.5 23.1 Md 03.39480530971752970832 sy 2202 67.5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 VALUE LINE PUB. LLC 21-23 1.14 1.21 1.51 238 323 390 5.22 5.80 10.17 18.54 20127.15 31.15 4189 40.41 4.72 $1.05 57.65 Sales per sh 72.20 05 04 25 37 2 85 102 235 425 6.95 696 8.09 11:59 1050 11.41 13.55 15.30 "Cash Flowpersh 21.30 02 01 21 32 58 77 90 216 8.31 568 8.45 922 2.31 9.21 11.40 12.85 Earnings per sh 18.50 38 1.81 198 2.18 240 272 3.05 Divds Deeld per shF 4.40 03 03 04 11 12 .18 31 125 130 1.63 202 229 243 265 280 Cap' Spending persh 3.35 B1 82 126 167 2.38 3.38 76 118 179 19.69 19.02 21.30 24.03 2015 30.00 33.45 Book Value per sh 52.90 5025451342 54802 5845159663 6106362183629868411865049 65725 6294556662 55788553625126249000 4700.0 Common Shs Outsta 4500,0 613 BB 380 262 29.1 283 2014 152 124 130 123 126 149 Boldre are Avg Ann' PIE Ratio 15.0 3.36 4.78 2.01 140 157 140 1.80 120 97 78 78 19 BB 54 56 .73 Value Une Relative PE Ratio .85 5 23% 22 Us 2.1% 18% Avg Ann' Did Yield 1.6% CAPITAL STRUCTURE as of 3/31/18 327938637 6522510820156508 170910102795 283715 215639 220234 260000 271000 Sales (Sill 325000 Total Debt $121840 mil. Due in 5 Yrs $50000 20.8% 2292 293 294 325 326 32.1% 36.3% mil 27 312 31.5% 2.5% Operating Margin 35.5% 473.0 LT Debt $101362 mil LT interest S5000 mil 7080 10270 18140 32770 67570 79050 11251 10505 10157 10500 17500 Depreciation (Smilt 12500 (44% of Cap 18340 57040 1401325322 417303703739510 53094 45687 48351 55000 50000 Net Profit Smal) 81300 Leases, Uncapitalized Annual rentals 51223 mil. 209% 2885 205 212 252 252 215 26.4 2885 246% 19.0% 19.0% Income Tax Rate 19.0% 1495 156% 2155 239 287 217 218 228% No Defined Benefit Pension Plan 2128 21.1% 21.522.3% Net Profit Margin 25.6% 20598 1898320956 12018 1911 29628 50800 87880 27863 27801 Pld Stock None 30000 12500 Working Cap' (Smil 40000 1890 20907 53483 75427 97207 100000 15000 Long-Term Debt (Smil) 125000 Common Stock 4.915,138.000 sh. 21030 27832 4779170815 113210123549 11150 113055 1224 134049 147000 159000 Shr. Equity Smil 238000 as of 2018 22.0% 20% 29.3% 38% 3538 239 24 313% 22% 2184 23.5% 2.0% Return on Total Cap' 24.0% MARKET CAP: 5913 billion (Large Cap) 23.0% 20.5% 2% 3085 353% 30% 35.4 447% 35.6% 36.1% 30% 38.0% Retum on Shr. Equity 35.0% CURRENT POSITION 2016 2017 331/18 205 205 293 3385 3824 215 254 25.8% 282%265% 28.0% 29.0% Retained to Com Eq 26.5% SMILL) Cash Assets 67155 74181 26% 24% 24% All Divds to Net Prot 245 Receivables inventory (FIFO) 15754 17874 14324 BUSINESS: Apple Inc. established in 1977, is one of the world's Pay, and a host of Gigtal content from the popular iTunes store and Other 21828 3178 2012 carpet makers of PCs and peripheral and consumer products, such other portals. Research and development 5.1% of '17 sales. Has Current Assets 106860 128845 188058 he podignus player the Pad Poremar procinately 123.000 employers. Olde. own less than 10% of Acets Payable 37294 49049 34311 phone, and the Apple Watch for sale primary to the business, cormon stock: Vanguard, 6.6%; BackRock, 6.3% (12/17 Proxy). Debt Due 11606 18473 20478 Creative, education, government and consumers. CEO Tim Cook Inc.: CA. Ader: 1 Infinite Loop Cupertino, CA Other 30107 33292 34531 sels operating systems Services Coud storage and Apple 95014. TeL: 408-996-1010 Internet: www.apple.com Current Lab 79006 100814 88320 Apple shares, briefly touching a fresh augurs well for future upgrade cycles, as ANNUAL RATES Past Past Estd 15-17 52-week high in the mid-190s, have well as for the broader iPhone "halo ef- of charge pers 10 Y 59 to 21-23 Sales 29.5% 20.0% been solid relative performers since fect." Indeed, the huge user base means *Cash Flow 39.0% 20.0% 11.5 our last full-page review in March. that the company should have an easier Earnings 37.5% 16,5% 13.ON The company got another vote of con- Dividends 1255 time selling its other products from wire Book Value fidence from legendary investor Warren less AirPods and the Apple Watch to the 29.5% 14,0% 14.0% Fiscal QUARTERLY SALES ( SL) Buffett. who announced that Berkshire new HomePod smart speaker, in the com- Year Dec.Per Mer Per Jun. Per Sep. Per Year AAPL shares during the first three The high-margined services business, Ends Hathaway had acquired 75 million more ing periods. In the meantime... 2015 74599 58010 49505 51501 2016 75872 50557 42358 46852 215639 ready amassed approximately 165 million by the Street, continues to chug along 232715 months of the year. (Berkshire had al- which often appears to be overlooked 2018 84283 61137 51970 58600 360000 shares as of the end of 2017) In addition. This segment, including offerings like Ap 2019 82000 8700 84200 61100271000 the fundamental picture at the tech giant ple Pay and iCloud storage, registered a EARNINGS SHARE Year Dec. Per Mar Per Jun. Pet Sep Per Buchfears of a slowdown in the global smarting the second quarter. And it will proba 2015 3.08 bly remain a key part of the growth story 1.85 150 922 Recent results have been better than here, especially as Apple further leverages 1.42 2017 3.36 8: anticipated. For the second quarter of fis- its brand in China and other large emerg- 2.10 1.67 2.07 921 cal 2018 (year ends September 29th). ing markets. All in all, given the strong 2018 3.89 273 218 2.60 11.40 2019 4.40 3.10 245 2.90 12.85 share net came in at $2.73. topping our prospects, we now envision share net $2.69 estimate and Wall Street's con- Cal QUARTERLY DIVIDENDS PAID climbing 24% in fiscal 2018 (to $11.40) and endar Mar 31 Jun 30 Sep.30 Dec 31 Year unit sales of 52 2 million were surprisingly This quality Dow component is timely sensus view of $2.67. Even better, iPhone another 13% next year (to $12.85) 2014 436 .47 47 2015 47 52 1.85 healthy. led by brisk demand for the top (2) and, as currently valued, still of 52 52 203 tier Phone X model that was released fers good upside potential to 2021. 2016 52 57 57 2017 57 63 53 246 back in November). And the total smart. 2023. Stock buybacks and steady dividend 2018 63 phone installed base continued to expand growth ought to sweeten the pot. at an impressive, double-digit clip. This Justin Hellman June 29, 2018 (A) Fiscal year ends last Saturday in Septem-ngs report due late July mil. adjusted depled 3/12 Payments typically made in Feb Company's Financial Strength Art ber. (B) Diluted earnings. Quarters may not for splits. (D) Depreciation on acted nay, May, Auguit, and November Stock's Price Stability add to total due to rounding. Excludes non basis. (E) includes tables in 2017, 58015 70 Price Growth Persistence 85 recurring gain:05. 2c: loss: 02.10. Nexteam mil. 51.56 a stare few vidend policy Earnings Predictability 65 2018 Value Line. Alle reserved Fall om de and products and THE PURUSHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREN This publications cancelamento subscribe call 1-800-VALUELINE of may be produced restored con concert 87940 9.5 Fiscal 2016 328 162 2. Ch11 Financial Planning Exercise 7 eBook Chapter 11 Financial Planning Exercise 7 Interpreting stock report information Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for Apple. a. What was the amount of revenues (i.e., sales) generated by the company in 2016? $ million b. What were the latest annual dividends per share and dividend yield in 2016? Round to two decimal places. $ a share % c. What is the earnings per share (EPS) projection for 2019? $ a share d. How many shares of common stock were outstanding? e. What were the book value per share and EPS in 2016? $ book value per share $ earnings per share f. How much actual long-term debt did the company have in 2018? $ million APPLE INC. NDG-AAPL 212 NOX Prot 1125 1475 888 PE DVD VALUE PRICE Media 130 PERATO YLD LINE TIMELINESS 2 weed 1/18 29.0 286 306 487 610 1007 822 1198 1345 118,7 1772 1942 112 44 55.0 Target Price Range 705 6 185 1148 1502 SAFETY 20 LEGENDS 2021 2022 2023 TECHNICAL 2 2018 Chow Roho Sangh L400 2. 20 BETA 95 11.00 - Market lord -320 2021-23 PROJECTIONS Options les Shaded and An' Total -200 Price Gain Return -160 High 320 (-70% 16% LOW 235 -25% -120 +100 Insider Decisions 180 ASONDJFMA toba 000000000 -60 Optor 3010 00 08 09 tos 6 0 2 2 1 1 0 0 3 40 Institutional Decisions TOT. RETURN 5/18 17 OTP THE VLARITA STOCK 858 1010 Ty 24.2 14.3 to sell 1361 1200 Sy 51.5 23.1 Md 03.39480530971752970832 sy 2202 67.5 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 VALUE LINE PUB. LLC 21-23 1.14 1.21 1.51 238 323 390 5.22 5.80 10.17 18.54 20127.15 31.15 4189 40.41 4.72 $1.05 57.65 Sales per sh 72.20 05 04 25 37 2 85 102 235 425 6.95 696 8.09 11:59 1050 11.41 13.55 15.30 "Cash Flowpersh 21.30 02 01 21 32 58 77 90 216 8.31 568 8.45 922 2.31 9.21 11.40 12.85 Earnings per sh 18.50 38 1.81 198 2.18 240 272 3.05 Divds Deeld per shF 4.40 03 03 04 11 12 .18 31 125 130 1.63 202 229 243 265 280 Cap' Spending persh 3.35 B1 82 126 167 2.38 3.38 76 118 179 19.69 19.02 21.30 24.03 2015 30.00 33.45 Book Value per sh 52.90 5025451342 54802 5845159663 6106362183629868411865049 65725 6294556662 55788553625126249000 4700.0 Common Shs Outsta 4500,0 613 BB 380 262 29.1 283 2014 152 124 130 123 126 149 Boldre are Avg Ann' PIE Ratio 15.0 3.36 4.78 2.01 140 157 140 1.80 120 97 78 78 19 BB 54 56 .73 Value Une Relative PE Ratio .85 5 23% 22 Us 2.1% 18% Avg Ann' Did Yield 1.6% CAPITAL STRUCTURE as of 3/31/18 327938637 6522510820156508 170910102795 283715 215639 220234 260000 271000 Sales (Sill 325000 Total Debt $121840 mil. Due in 5 Yrs $50000 20.8% 2292 293 294 325 326 32.1% 36.3% mil 27 312 31.5% 2.5% Operating Margin 35.5% 473.0 LT Debt $101362 mil LT interest S5000 mil 7080 10270 18140 32770 67570 79050 11251 10505 10157 10500 17500 Depreciation (Smilt 12500 (44% of Cap 18340 57040 1401325322 417303703739510 53094 45687 48351 55000 50000 Net Profit Smal) 81300 Leases, Uncapitalized Annual rentals 51223 mil. 209% 2885 205 212 252 252 215 26.4 2885 246% 19.0% 19.0% Income Tax Rate 19.0% 1495 156% 2155 239 287 217 218 228% No Defined Benefit Pension Plan 2128 21.1% 21.522.3% Net Profit Margin 25.6% 20598 1898320956 12018 1911 29628 50800 87880 27863 27801 Pld Stock None 30000 12500 Working Cap' (Smil 40000 1890 20907 53483 75427 97207 100000 15000 Long-Term Debt (Smil) 125000 Common Stock 4.915,138.000 sh. 21030 27832 4779170815 113210123549 11150 113055 1224 134049 147000 159000 Shr. Equity Smil 238000 as of 2018 22.0% 20% 29.3% 38% 3538 239 24 313% 22% 2184 23.5% 2.0% Return on Total Cap' 24.0% MARKET CAP: 5913 billion (Large Cap) 23.0% 20.5% 2% 3085 353% 30% 35.4 447% 35.6% 36.1% 30% 38.0% Retum on Shr. Equity 35.0% CURRENT POSITION 2016 2017 331/18 205 205 293 3385 3824 215 254 25.8% 282%265% 28.0% 29.0% Retained to Com Eq 26.5% SMILL) Cash Assets 67155 74181 26% 24% 24% All Divds to Net Prot 245 Receivables inventory (FIFO) 15754 17874 14324 BUSINESS: Apple Inc. established in 1977, is one of the world's Pay, and a host of Gigtal content from the popular iTunes store and Other 21828 3178 2012 carpet makers of PCs and peripheral and consumer products, such other portals. Research and development 5.1% of '17 sales. Has Current Assets 106860 128845 188058 he podignus player the Pad Poremar procinately 123.000 employers. Olde. own less than 10% of Acets Payable 37294 49049 34311 phone, and the Apple Watch for sale primary to the business, cormon stock: Vanguard, 6.6%; BackRock, 6.3% (12/17 Proxy). Debt Due 11606 18473 20478 Creative, education, government and consumers. CEO Tim Cook Inc.: CA. Ader: 1 Infinite Loop Cupertino, CA Other 30107 33292 34531 sels operating systems Services Coud storage and Apple 95014. TeL: 408-996-1010 Internet: www.apple.com Current Lab 79006 100814 88320 Apple shares, briefly touching a fresh augurs well for future upgrade cycles, as ANNUAL RATES Past Past Estd 15-17 52-week high in the mid-190s, have well as for the broader iPhone "halo ef- of charge pers 10 Y 59 to 21-23 Sales 29.5% 20.0% been solid relative performers since fect." Indeed, the huge user base means *Cash Flow 39.0% 20.0% 11.5 our last full-page review in March. that the company should have an easier Earnings 37.5% 16,5% 13.ON The company got another vote of con- Dividends 1255 time selling its other products from wire Book Value fidence from legendary investor Warren less AirPods and the Apple Watch to the 29.5% 14,0% 14.0% Fiscal QUARTERLY SALES ( SL) Buffett. who announced that Berkshire new HomePod smart speaker, in the com- Year Dec.Per Mer Per Jun. Per Sep. Per Year AAPL shares during the first three The high-margined services business, Ends Hathaway had acquired 75 million more ing periods. In the meantime... 2015 74599 58010 49505 51501 2016 75872 50557 42358 46852 215639 ready amassed approximately 165 million by the Street, continues to chug along 232715 months of the year. (Berkshire had al- which often appears to be overlooked 2018 84283 61137 51970 58600 360000 shares as of the end of 2017) In addition. This segment, including offerings like Ap 2019 82000 8700 84200 61100271000 the fundamental picture at the tech giant ple Pay and iCloud storage, registered a EARNINGS SHARE Year Dec. Per Mar Per Jun. Pet Sep Per Buchfears of a slowdown in the global smarting the second quarter. And it will proba 2015 3.08 bly remain a key part of the growth story 1.85 150 922 Recent results have been better than here, especially as Apple further leverages 1.42 2017 3.36 8: anticipated. For the second quarter of fis- its brand in China and other large emerg- 2.10 1.67 2.07 921 cal 2018 (year ends September 29th). ing markets. All in all, given the strong 2018 3.89 273 218 2.60 11.40 2019 4.40 3.10 245 2.90 12.85 share net came in at $2.73. topping our prospects, we now envision share net $2.69 estimate and Wall Street's con- Cal QUARTERLY DIVIDENDS PAID climbing 24% in fiscal 2018 (to $11.40) and endar Mar 31 Jun 30 Sep.30 Dec 31 Year unit sales of 52 2 million were surprisingly This quality Dow component is timely sensus view of $2.67. Even better, iPhone another 13% next year (to $12.85) 2014 436 .47 47 2015 47 52 1.85 healthy. led by brisk demand for the top (2) and, as currently valued, still of 52 52 203 tier Phone X model that was released fers good upside potential to 2021. 2016 52 57 57 2017 57 63 53 246 back in November). And the total smart. 2023. Stock buybacks and steady dividend 2018 63 phone installed base continued to expand growth ought to sweeten the pot. at an impressive, double-digit clip. This Justin Hellman June 29, 2018 (A) Fiscal year ends last Saturday in Septem-ngs report due late July mil. adjusted depled 3/12 Payments typically made in Feb Company's Financial Strength Art ber. (B) Diluted earnings. Quarters may not for splits. (D) Depreciation on acted nay, May, Auguit, and November Stock's Price Stability add to total due to rounding. Excludes non basis. (E) includes tables in 2017, 58015 70 Price Growth Persistence 85 recurring gain:05. 2c: loss: 02.10. Nexteam mil. 51.56 a stare few vidend policy Earnings Predictability 65 2018 Value Line. Alle reserved Fall om de and products and THE PURUSHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREN This publications cancelamento subscribe call 1-800-VALUELINE of may be produced restored con concert 87940 9.5 Fiscal 2016 328 162 2. Ch11 Financial Planning Exercise 7 eBook Chapter 11 Financial Planning Exercise 7 Interpreting stock report information Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for Apple. a. What was the amount of revenues (i.e., sales) generated by the company in 2016? $ million b. What were the latest annual dividends per share and dividend yield in 2016? Round to two decimal places. $ a share % c. What is the earnings per share (EPS) projection for 2019? $ a share d. How many shares of common stock were outstanding? e. What were the book value per share and EPS in 2016? $ book value per share $ earnings per share f. How much actual long-term debt did the company have in 2018? $ million