Integrating Accounting for Liabilities and Equity Obtain Apple's 2016 10-K (filed October 26, 2016) either through the "Investor Relations" portion of its website (do a web search for "Apple Investor Relations") or go to www.sec.gov and click "Company Filings Search" under "Filings." Required: Using Apple's 10-K, answer the following questions (Hint: It may be easier to use the Word or PDF file and use the search feature within the program): 1. Calculate Apple's current, quick, and cash ratios for 2015 and 2016. The industry averages for these ratios for 2016 were 1.72, 1.41, and 0.77, respectively. Round your answers to two decimal places. 2016 2015 Current Ratio 1.35 V 1.11 Quick Ratio 1.33 X 0.88 Cash Ratio 0.85 0.52 Comment on Apple's short-term liquidity. For 2016, Apple exceeds the industry average for the cash but is below the industry average for the current and quick ratio. However, because there is little concern about Apple's ability to sell its inventories, the current ratio provides relatively high confidence that Apple will be able to meet its short-term obligations. 2. Calculate Apple's debt to equity, long-term debt to equity, and times interest earned (accrual basis) for 2015 and 2016. The industry averages for these ratios for 2016 were 52.42%, 36.41%, and 13.83, respectively. You will need to read the "Other Income and Expense" section of the Management, Discussion & Analysis section to find the amount of interest expense. Round your answers to two decimal places. 2016 2015 Debt to Equity 67.86 X % 0.54 X % Long-Term Debt to Equity 58.81 X % 44.68 X % Times Interest Earned (Accrual Basis) 43.15 x 141.08 X Comment on Apple's mix of debt and equity and long-term solvency. 12 Months Ended Sep. 24, 2016 Sep. 26, 2015 Sep. 27, 2014 $ 215.639 131,376 84,263 $ 233,715 140,089 93,626 S 182.795 112.258 70,537 CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, S in Millions Income Statement [Abstract] Net sales Cost of sales Gross margin Operating expenses: Research and development Selling, general and administrative Total operating expenses Operating income Other income/expense), net Income before provision for income taxes Provision for income taxes Net income Earnings per share: Basic (in dollars per share) Diluted (in dollars per share) Shares used in computing earnings per share: Basic (in shares) Diluted in shares) Cash dividends declared per share (in dollars per share) 10,045 14,194 24,239 60.024 1,348 61,372 15,685 $ 45,687 8,067 14.329 22.396 71,230 1,285 72,515 19,121 $ 53,394 6,041 11,993 18,034 52,503 980 53,483 13,973 $ 39,510 S 8.35 S 8.31 S 9.28 S 9.22 S 6.49 S 6.45 5,470.820 5,500,281 5,753,421 5,793,069 6,085,572 6,122,663 $ 2.18 S 1.98 S 1.82 Sep. 24, 2016 Sep. 26, 2015 $ 20,484 46,671 $ 21,120 20,481 15,754 16,849 2,132 13,545 8,283 106,869 170,430 27,010 5,414 3,206 8,757 321,686 2.349 13,494 15,085 89,378 164,065 22,471 5,116 3.893 5.422 290,345 CONSOLIDATED BALANCE SHEETS- USD ($) $ in Millions Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of $53 and $63, respectively Inventories Vendor non-trade receivables Other current assets Total current assets Long-term marketable securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets Current liabilities: Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Deferred revenue, non-current Long-term debt Other non-current liabilities Total liabilities Commitments and contingencies Shareholders' equity: Common stock and additional paid-in capital, S0.00001 par value: 12,600,000 shares authorized; 5,336,166 and 5,578,753 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income/loss) Total shareholders' equity Total liabilities and shareholders' equity 37,294 22,027 8,080 8,105 3,500 79,006 2.930 75,427 36,074 193,437 35,490 25,181 8,940 8,499 2,500 80.610 3,624 53,329 33,427 170,990 31,251 27,416 96,364 92,284 634 128,249 $ 321.686 (345) 119,355 $ 290,345 (51) CONSOLIDATED STATEMENTS OF 12 Months Ended CASH FLOWS - USD ($) $ in Millions Sep. 24, 2016 Sep. 26, 2015 Sep. 27, 2014 Statement of Cash Flows [Abstract] Cash and cash equivalents, beginning of the year $ 21,120 $ 13.844 $ 14,259 Operating activities: Net income 45,687 53.394 39,510 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 10,505 11,257 7.946 Share-based compensation expense 4,210 3,586 2.863 Deferred income tax expense 4,938 1,382 2,347 Changes in operating assets and liabilities: Accounts receivable, net 1,095 611 (4.232) Inventories 217 (238) (76) Vendor non-trade receivables (3,735) (2.220) Other current and non-current assets 1,090 (179) 167 Accounts payable 1,791 5,400 5,938 Deferred revenue (1,554) 1,042 1,460 Other current and non-current liabilities (2,104) 8.746 6,010 Cash generated by operating activities 65.824 81.266 59.713 Investing activities: Purchases of marketable securities (142,428) (166,402) (217,128) Proceeds from maturities of marketable securities 21,258 14,538 18,810 Proceeds from sales of marketable securities 90.536 107,447 189,301 Payments made in connection with business acquisitions, net (297) (343) (3,765) Payments for acquisition of property, plant and equipment (12,734) (11,247) (9,571) Payments for acquisition of intangible assets (814) (241) (242) Payments for strategic investments (1,388) 0 (10) (110) (26) 26 Cash used in investing activities (45,977) (56,274) (22.579) Financing activities: Proceeds from issuance of common stock 495 543 730 Excess tax benefits from equity awards 407 749 739 Payments for taxes related to net share settlement of equity awards (1,570) (1,499) (1,158) Payments for dividends and dividend equivalents (12,150) (11,561) (11 126) Repurchases of common stock (29,722) (35,253) (45,000) Proceeds from issuance of term debt, net 24.954 27,114 11,960 Repayments of term debt (2,500) 0 0 Change in commercial paper, net (397) 2,191 6,306 Cash used in financing activities (20,483 (17.716) (37,549) Increase/Decrease) in cash and cash (636) 7,276 equivalents (415) Cash and cash equivalents, end of the 20,484 21,120 year 13,844 Supplemental cash flow disclosure: Cash paid for income taxes, net 10,444 13,252 10,026 Cash paid for interest $ 1,316 S 514 S 339 Other