FSA 4-1 Company Analysis LO A1 Refer to Apple's financial statements in Anpendix A to answer the following. Required 1. Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 29, 2018 2. Compute the current ratio and acid test ratio as of September 29, 2018, and September 30, 2017 3. Does Apple's 2018 current ratio outperform or underperform the (assumed) industry average of 1.5? 4. Does Apple's 2018 acid-test ratio outperform or underperform the (assumed) industry average of 1.0? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 29, 2018. (Enter your answers in millions of dollars.) Cout of goods purchased Required 1 Required 2 > Required 1. Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 29, 2018 2. Compute the current ratio and acid-test ratio as of September 29, 2018, and September 30, 2017. 3. Does Apple's 2018 current ratio outperform or underperform the assumed) industry average of 1.5? 4. Does Apple's 2018 acid-test ratio outperform or underperform the (assumed) Industry average of 10? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the current ratio and acid-test ratio as of September 29, 2018, and September 30, 2017. (Enter your answers in millions of dollars.) 2018 2017 S millions Current Ratio Acid-Test Ratio Current Ratio Acid-Test Ratio Current assets Cash and equivalents Marketable securities (current) Accounts receivables, net Inventories, net Vendor non-trade receivables Other current assets $ 0 0 Total current assets $ $ 0 $ 0 Total quick assets Total current liabilities 0 0 0 0 Ratio CONSOLIDATED BALANCE SHEETS Apple Inc. (In millions, except number of shares which are reflected in thousands and par value) September 29, 2018 September 30, 2017 ASSETS Current assets Cash and cash equivalents Marketable securities 25,913 20,289 40.388 53.892 Accounts receivable, net 23.186 17,874 Inventories 4,855 Vendor non-trade receivables Other current assets 3,956 25,809 17.799 12,087 13.936 Total current assets 131,339 128,645 Non-current assets Marketable securities 170,799 194,714 33,783 41,304 Property, plant and equipment, net Other non-current assets Total non-current assets Total assets 22,283 18.177 234,386 246,674 365,725 375,319 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable Other current liabilities 55,888 $ 44.242 32,687 30,551 Deferred revenue 7,543 7.548 Commercial paper 11,964 11.977 Term debt 8,784 6,496 116,866 100,814 Total current liabilities Non-current liabilities 2,836 Deferred revenue Term debt 2,797 93,735 45.180 97,207 Other non-current liabilities 40,415 Total non-current liabilities 141,712 140.458 241.272 Total liabilities 258,578 Commitments and contingencies 40,201 35,867 Shareholders' equity Common stock and additional paid-in capital, 50.00001 par value: 12,600,000 shares authorized: 4.754,986 and 5.126,201 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income (los) Total shareholders' equity Total liabilities and shareholders equity 98.330 70,400 (3.454) 107.147 (150) 134.047 375,319 $ 365,725 See accompanying Notes to Consolidated Financial Statements AppendxA Financial Statement formation A-3 APPLE Seplember 24, 2016 5 215690 131,376 $4260 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, exceptumber of shares which are reflected in thousands and per share Years ended September 29, 2018 September 30, 2017 Net sales $ 265,595 229.24 Cost of sales 163.756 141,048 Grous margin 10139 SIN Operating expenses Research and development 14236 11.581 Selling general and administrative 16,705 15.21 Total operating expenses 30,941 230 Operating income 70.898 61.343 Other income (expense), 2.00 2,745 Income before provision for income taxes 72.903 60089 Provision for income taxes 13372 15,735 Net Income $ 59.$31 $ 48351 10.045 14,114 60.004 1.345 61.372 15.65 5 45.687 Earnings per share Basic Diluted 12.01 1191 5 $ 5 $ R35 31 $ Shares din computing asin per share Basic 4,955,377 547020 Diluted 5.217.242 5.251.692 5.000.109 3.500,281 See accompanying Notes to Comunidated Financial Statement 45.687 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in mo Years ended September 29, 2016 September 20, 2017 September 24, 2016 Net income $ 59.531 5 35 5 Other comprehensive incomo los Change in foreign currency translation, et of tax effects of $(1), 5(77) and SR, spectively 1925) Change in realized in oes ce derivative Instruments Change in fair value of derivatives, net of tat benefit (expense of S(149). 56478) and $7), respectively 523 IS Adjustment for et gaine) loses alised and included in net income met of tax expense benefit of 54106). 575 and 5131, spectively 382 (147 Total change in realised grosses on derivative instruments, set of tax 903 (1623 Changin nied inson martable securities Change is fair value of marketable curitie, net of tax benefit expense) of 51,156,5425 and 563) povely 0.407) 789 1.5 Adjustment for wet pu) ones realed and included in second net of tax expense of $21.535 and Spectly 164 Tocal change in dies on the socorities of tax 0.400 (46) Total de comprehensive income dow) COM (54 979 Total comprehensive income 36.305 47567 MS See accompanying Notes to Cated Financial Statem APPLE Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Common Stock and Other Total Additional Paid-In Capital Retained Comprehensive Shareholders Shares Amount Earnings Income (Loss) Equity Balances as of September 26, 2015 5.578,753 27.416 5 92.284 5 (345) 5 119,355 Net income 45.687 45,687 Other comprehensive income (los) 979 979 Dividends and dividend equivalents declared at $2.18 per share of RSU (12.188) (12.188) Repurchase of common stock (279.609 (29,000) (29,000) Share-based compensation 4.362 4,262 Common stock issued, net of shares withheld for employee taxes 37022 (805) (419) (1,225) Tax benefit from equity awards, including transfer pricing adjustments 379 379 Balances us of September 24, 2016 $336,166 31.251 96,164 634 128,249 Net income 18.351 48,351 Other comprehensive income on 784) (784) Dividends and dividend equivalents declared at $2.40 per share or RSU (12.803) (12.803) Repurchase of common stock (246.496) (33.001) (33.001) Share-based compensation 4.909 4,909 Common stock issued, net of shares withheld for employee taxes 36.531 0913) (581) Tax benefit from equity awards, including transfer pricing adjustments 620 620 Balances as of September 30, 2017 5.126.201 35 857 98.330 (150) 134,047 Cumulative effect of change in accounting principle 278 (278) Net income 59.531 59,531 Other comprehensive income (los) (3.026) 03.026) Dividends and dividend equivalents declared at $2.72 per shure or RSU (13.735) (13.735) Repurchase of common stock (405,549 (73.056) (73,056) Share-based compensation 5443 3.443 Common stockised, net of shares withheld for employee taxes 34354 L 109 198 C:0573 Balances as of September 29, 2018 4.254.985 40.2015 2000 13454) 107147 (1.494) 111 See companying Notes to Colidated Financial Statement September 24, 2016 $ 21.120 45.687 10,505 4.210 4,938 486 527 217 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years ended September 29, 2018 September 30, 2017 Cash and cash equivalents, beginning of the year $ 20.289 20.484 Operating activities Net income 59,531 48,351 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 10.963 10.157 Share-based compensation expense 5340 4,840 Deferred income tax expense (benefit) (32.590) 5.966 Other (166) Changes in operating assets and liabilities Accounts receivable, net (5.322) (2,093) Inventories 828 (2.723) Vendor non-trade receivables (2010) (4.254) Other current and non-current assets (423) (5318) Accounts payable 9.175 8966 Deferred revenge (626) Other current and non-current liabilities 38,490 1.125 Cash generated by operating activities 77.434 64.225 Investing activities Purchases of marketable securities (71.156) (159.486) Proceeds from maturities of marketable securities SS.SI 31.775 Proceeds from sales of marketable securities 47.31 94564 Payments for acquisition of property, plant and equipment (13.313) (12,451) Payments made in connection with business acquisitions, net (721) (329) Purchases of non-marketable securities 1.571) (521) Proceeds from non-marketable securities 353 126 Other (145) (124) 16.066 46.446 Financing activities (51) 1.055 2,117 (1.554) (1,906) 66,231 (142,428) 21.258 20,536 (12.734) (297) (1388) Cash generated by (used in) investing activities (924) (45.977) Proceeds from suance of common stock 669 555 495 (1,874) (12.769) 2.900 28,662 Payments for taxes related to net share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from ince of term debt, net Repayments of term debit Change in commercial paper, net Cash used in financing activities Increase (decrease in cash and cash equivalents Cash and cash equivalents, cod of the year 2.527) (13.712) (72.73) 6969 (6.500) 07 (87.876 5104 25.913 (1.570) (12.150) (29.722) 24,954 (2.500) 3.500) (397) 3852 {17974) (195) 20.890) 1616) 20,484 5 20.289 5 Supplemental cash flow disclosure Cush paid for income taxes, ne Cash paid for interest 5 104175 11.591 5 10,444 5 1.022 5 2,092 $ 1.316 See accompanying Notes to Contencial Statements FSA 4-1 Company Analysis LO A1 Refer to Apple's financial statements in Anpendix A to answer the following. Required 1. Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 29, 2018 2. Compute the current ratio and acid test ratio as of September 29, 2018, and September 30, 2017 3. Does Apple's 2018 current ratio outperform or underperform the (assumed) industry average of 1.5? 4. Does Apple's 2018 acid-test ratio outperform or underperform the (assumed) industry average of 1.0? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 29, 2018. (Enter your answers in millions of dollars.) Cout of goods purchased Required 1 Required 2 > Required 1. Assume that the amounts reported for inventories and cost of sales reflect items purchased in a form ready for resale. Compute the net cost of goods purchased for the year ended September 29, 2018 2. Compute the current ratio and acid-test ratio as of September 29, 2018, and September 30, 2017. 3. Does Apple's 2018 current ratio outperform or underperform the assumed) industry average of 1.5? 4. Does Apple's 2018 acid-test ratio outperform or underperform the (assumed) Industry average of 10? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Compute the current ratio and acid-test ratio as of September 29, 2018, and September 30, 2017. (Enter your answers in millions of dollars.) 2018 2017 S millions Current Ratio Acid-Test Ratio Current Ratio Acid-Test Ratio Current assets Cash and equivalents Marketable securities (current) Accounts receivables, net Inventories, net Vendor non-trade receivables Other current assets $ 0 0 Total current assets $ $ 0 $ 0 Total quick assets Total current liabilities 0 0 0 0 Ratio CONSOLIDATED BALANCE SHEETS Apple Inc. (In millions, except number of shares which are reflected in thousands and par value) September 29, 2018 September 30, 2017 ASSETS Current assets Cash and cash equivalents Marketable securities 25,913 20,289 40.388 53.892 Accounts receivable, net 23.186 17,874 Inventories 4,855 Vendor non-trade receivables Other current assets 3,956 25,809 17.799 12,087 13.936 Total current assets 131,339 128,645 Non-current assets Marketable securities 170,799 194,714 33,783 41,304 Property, plant and equipment, net Other non-current assets Total non-current assets Total assets 22,283 18.177 234,386 246,674 365,725 375,319 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable Other current liabilities 55,888 $ 44.242 32,687 30,551 Deferred revenue 7,543 7.548 Commercial paper 11,964 11.977 Term debt 8,784 6,496 116,866 100,814 Total current liabilities Non-current liabilities 2,836 Deferred revenue Term debt 2,797 93,735 45.180 97,207 Other non-current liabilities 40,415 Total non-current liabilities 141,712 140.458 241.272 Total liabilities 258,578 Commitments and contingencies 40,201 35,867 Shareholders' equity Common stock and additional paid-in capital, 50.00001 par value: 12,600,000 shares authorized: 4.754,986 and 5.126,201 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income (los) Total shareholders' equity Total liabilities and shareholders equity 98.330 70,400 (3.454) 107.147 (150) 134.047 375,319 $ 365,725 See accompanying Notes to Consolidated Financial Statements AppendxA Financial Statement formation A-3 APPLE Seplember 24, 2016 5 215690 131,376 $4260 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, exceptumber of shares which are reflected in thousands and per share Years ended September 29, 2018 September 30, 2017 Net sales $ 265,595 229.24 Cost of sales 163.756 141,048 Grous margin 10139 SIN Operating expenses Research and development 14236 11.581 Selling general and administrative 16,705 15.21 Total operating expenses 30,941 230 Operating income 70.898 61.343 Other income (expense), 2.00 2,745 Income before provision for income taxes 72.903 60089 Provision for income taxes 13372 15,735 Net Income $ 59.$31 $ 48351 10.045 14,114 60.004 1.345 61.372 15.65 5 45.687 Earnings per share Basic Diluted 12.01 1191 5 $ 5 $ R35 31 $ Shares din computing asin per share Basic 4,955,377 547020 Diluted 5.217.242 5.251.692 5.000.109 3.500,281 See accompanying Notes to Comunidated Financial Statement 45.687 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in mo Years ended September 29, 2016 September 20, 2017 September 24, 2016 Net income $ 59.531 5 35 5 Other comprehensive incomo los Change in foreign currency translation, et of tax effects of $(1), 5(77) and SR, spectively 1925) Change in realized in oes ce derivative Instruments Change in fair value of derivatives, net of tat benefit (expense of S(149). 56478) and $7), respectively 523 IS Adjustment for et gaine) loses alised and included in net income met of tax expense benefit of 54106). 575 and 5131, spectively 382 (147 Total change in realised grosses on derivative instruments, set of tax 903 (1623 Changin nied inson martable securities Change is fair value of marketable curitie, net of tax benefit expense) of 51,156,5425 and 563) povely 0.407) 789 1.5 Adjustment for wet pu) ones realed and included in second net of tax expense of $21.535 and Spectly 164 Tocal change in dies on the socorities of tax 0.400 (46) Total de comprehensive income dow) COM (54 979 Total comprehensive income 36.305 47567 MS See accompanying Notes to Cated Financial Statem APPLE Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Common Stock and Other Total Additional Paid-In Capital Retained Comprehensive Shareholders Shares Amount Earnings Income (Loss) Equity Balances as of September 26, 2015 5.578,753 27.416 5 92.284 5 (345) 5 119,355 Net income 45.687 45,687 Other comprehensive income (los) 979 979 Dividends and dividend equivalents declared at $2.18 per share of RSU (12.188) (12.188) Repurchase of common stock (279.609 (29,000) (29,000) Share-based compensation 4.362 4,262 Common stock issued, net of shares withheld for employee taxes 37022 (805) (419) (1,225) Tax benefit from equity awards, including transfer pricing adjustments 379 379 Balances us of September 24, 2016 $336,166 31.251 96,164 634 128,249 Net income 18.351 48,351 Other comprehensive income on 784) (784) Dividends and dividend equivalents declared at $2.40 per share or RSU (12.803) (12.803) Repurchase of common stock (246.496) (33.001) (33.001) Share-based compensation 4.909 4,909 Common stock issued, net of shares withheld for employee taxes 36.531 0913) (581) Tax benefit from equity awards, including transfer pricing adjustments 620 620 Balances as of September 30, 2017 5.126.201 35 857 98.330 (150) 134,047 Cumulative effect of change in accounting principle 278 (278) Net income 59.531 59,531 Other comprehensive income (los) (3.026) 03.026) Dividends and dividend equivalents declared at $2.72 per shure or RSU (13.735) (13.735) Repurchase of common stock (405,549 (73.056) (73,056) Share-based compensation 5443 3.443 Common stockised, net of shares withheld for employee taxes 34354 L 109 198 C:0573 Balances as of September 29, 2018 4.254.985 40.2015 2000 13454) 107147 (1.494) 111 See companying Notes to Colidated Financial Statement September 24, 2016 $ 21.120 45.687 10,505 4.210 4,938 486 527 217 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years ended September 29, 2018 September 30, 2017 Cash and cash equivalents, beginning of the year $ 20.289 20.484 Operating activities Net income 59,531 48,351 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 10.963 10.157 Share-based compensation expense 5340 4,840 Deferred income tax expense (benefit) (32.590) 5.966 Other (166) Changes in operating assets and liabilities Accounts receivable, net (5.322) (2,093) Inventories 828 (2.723) Vendor non-trade receivables (2010) (4.254) Other current and non-current assets (423) (5318) Accounts payable 9.175 8966 Deferred revenge (626) Other current and non-current liabilities 38,490 1.125 Cash generated by operating activities 77.434 64.225 Investing activities Purchases of marketable securities (71.156) (159.486) Proceeds from maturities of marketable securities SS.SI 31.775 Proceeds from sales of marketable securities 47.31 94564 Payments for acquisition of property, plant and equipment (13.313) (12,451) Payments made in connection with business acquisitions, net (721) (329) Purchases of non-marketable securities 1.571) (521) Proceeds from non-marketable securities 353 126 Other (145) (124) 16.066 46.446 Financing activities (51) 1.055 2,117 (1.554) (1,906) 66,231 (142,428) 21.258 20,536 (12.734) (297) (1388) Cash generated by (used in) investing activities (924) (45.977) Proceeds from suance of common stock 669 555 495 (1,874) (12.769) 2.900 28,662 Payments for taxes related to net share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from ince of term debt, net Repayments of term debit Change in commercial paper, net Cash used in financing activities Increase (decrease in cash and cash equivalents Cash and cash equivalents, cod of the year 2.527) (13.712) (72.73) 6969 (6.500) 07 (87.876 5104 25.913 (1.570) (12.150) (29.722) 24,954 (2.500) 3.500) (397) 3852 {17974) (195) 20.890) 1616) 20,484 5 20.289 5 Supplemental cash flow disclosure Cush paid for income taxes, ne Cash paid for interest 5 104175 11.591 5 10,444 5 1.022 5 2,092 $ 1.316 See accompanying Notes to Contencial Statements
