Integrative Exercise Integrating Asset Accounting Obtain Apple's fiscal 2016 10-K (filed October 26, 2016) either through the "Investor Relations portion of its website (de a web search for "Apple Investor Relations") go to www.sec.gov and click "Company Filings Search under "Filings." Required: Using Apple's 10-K, answer the following questions: 1. Looking at Note 1 (Summary of Significant Accounting Policies), how does Apple define cash equivalents? All Investments with maturities of 4 months or less at the date of purchase. X 2. Looking at the "Report of Independent Registered Public Accounting Firm supplying an opinion on Apple's internal controls over financial reporting (p. 71 of the 10 ) what was the auditor's opinion regarding the effectiveness of Apple's internal control over financial reporting? Apple maintained in all material respects, effective internal control over financial reporting as of September 24, 2016. What criteria were used to evaluate the effectiveness of these controls? Internal Control Integrated Framework issued by the Committee of Sponsoring Organisations. X 3. What was Apple's accounts receivable turnover crounded to two decimal places) in 2015 and 20167 (Accounts receivable were $17,460,000,000 at the end of 2014.) 13.62 X times 2016 2015 13.23 X times Assuming the industry average for 2016 was 8.53. describe Apple's relative eiciency with its accounts receivable Apple's accounts receivable turnover is better than the industry average. Apple is managing its accounts receivable very efficiently. X 4. What was Apple's inventory tumover (rounded to two decimal places) in 2015 and 2016? (Inventories were $2,111,000,000 at the end of 2014.) 2016 62.82 X times 2015 58.64 X times Assuming the industry average for 2016 was 20.24, describe Apple's relative efficiency with its inventory. Apple's inventory turnover is better than the industry average. Apple is managing its inventory very efficiently. X 5. Describe the trend in Apple's accounts receivable and inventory tumover. Apple's accounts receivable turnover decreased X from 2015 to 2016. Its inventory turnover decreased from 2015 to 2016. 6. How many days sales does Apple have in receivables and inventory for 2015 and 2016? (When added together, this is its operating cycle) (Note: Round all answer to two decimal places.) 2016 2015 Days' Sales in Receivables days Days' Sales In Inventory days days days Operating Cycle days days 7. Conceptual Connection: Assuming 10% Interest, how much interest expense did Apple incur due to its deteriorating accounts receivable and inventory turnovers? Enter amount rounded to the nearest whole dollar. For example, 7,684,268,24 would be entered as 7,684,268. Remember, the numbers are in millions)? 8. What were Apple's gross profit, operating margin, and met profit ratios in 2016 (Note: Round answers to two decimal places) Gross Profit Ratio Operating Margin Ratio Net Profit Margin Ratio Assuming industry averages for 2016 were 27.57%, 7.87%, and 4.76%, respectively, describe Apple's profitability Apple was much more profitable than the industry average and was above the average for gross profit margin, operating margin, and net profit margin respectively, 9. Looking at Note 1 (Summary of Significant Accounting Policies), what method of depreciation does Apple se! Straight-line method X What is the range of useful life for internased software 3 to 5 years Is this useful life is appropriate Yes Integrative Exercise Integrating Asset Accounting Obtain Apple's fiscal 2016 10-K (filed October 26, 2016) either through the "Investor Relations portion of its website (de a web search for "Apple Investor Relations") go to www.sec.gov and click "Company Filings Search under "Filings." Required: Using Apple's 10-K, answer the following questions: 1. Looking at Note 1 (Summary of Significant Accounting Policies), how does Apple define cash equivalents? All Investments with maturities of 4 months or less at the date of purchase. X 2. Looking at the "Report of Independent Registered Public Accounting Firm supplying an opinion on Apple's internal controls over financial reporting (p. 71 of the 10 ) what was the auditor's opinion regarding the effectiveness of Apple's internal control over financial reporting? Apple maintained in all material respects, effective internal control over financial reporting as of September 24, 2016. What criteria were used to evaluate the effectiveness of these controls? Internal Control Integrated Framework issued by the Committee of Sponsoring Organisations. X 3. What was Apple's accounts receivable turnover crounded to two decimal places) in 2015 and 20167 (Accounts receivable were $17,460,000,000 at the end of 2014.) 13.62 X times 2016 2015 13.23 X times Assuming the industry average for 2016 was 8.53. describe Apple's relative eiciency with its accounts receivable Apple's accounts receivable turnover is better than the industry average. Apple is managing its accounts receivable very efficiently. X 4. What was Apple's inventory tumover (rounded to two decimal places) in 2015 and 2016? (Inventories were $2,111,000,000 at the end of 2014.) 2016 62.82 X times 2015 58.64 X times Assuming the industry average for 2016 was 20.24, describe Apple's relative efficiency with its inventory. Apple's inventory turnover is better than the industry average. Apple is managing its inventory very efficiently. X 5. Describe the trend in Apple's accounts receivable and inventory tumover. Apple's accounts receivable turnover decreased X from 2015 to 2016. Its inventory turnover decreased from 2015 to 2016. 6. How many days sales does Apple have in receivables and inventory for 2015 and 2016? (When added together, this is its operating cycle) (Note: Round all answer to two decimal places.) 2016 2015 Days' Sales in Receivables days Days' Sales In Inventory days days days Operating Cycle days days 7. Conceptual Connection: Assuming 10% Interest, how much interest expense did Apple incur due to its deteriorating accounts receivable and inventory turnovers? Enter amount rounded to the nearest whole dollar. For example, 7,684,268,24 would be entered as 7,684,268. Remember, the numbers are in millions)? 8. What were Apple's gross profit, operating margin, and met profit ratios in 2016 (Note: Round answers to two decimal places) Gross Profit Ratio Operating Margin Ratio Net Profit Margin Ratio Assuming industry averages for 2016 were 27.57%, 7.87%, and 4.76%, respectively, describe Apple's profitability Apple was much more profitable than the industry average and was above the average for gross profit margin, operating margin, and net profit margin respectively, 9. Looking at Note 1 (Summary of Significant Accounting Policies), what method of depreciation does Apple se! Straight-line method X What is the range of useful life for internased software 3 to 5 years Is this useful life is appropriate Yes