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AA 4-1 Company Analysis LO A1 Refer to Apple's financial statements in Appendix 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 30, 2017 2. Compute the current ratio and acid-test ratio as of September 30, 2017, and September 24, 2016 3. Does Apple's 2017 current ratio outperform or underperform the (assumed) Industry average of 1.5? 4. Does Apple's 2017 acid-test ratio outperform or underperform the (assumed) Industry average of 1.0? k ces 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 30, 2017. (Enter your answers in milions of dollars.) Cost of goods purchased Required 2 > Required 1 Required 2 Required 3 Required 4 Compute the current ratio and acid-test ratio as of September 30, 2017, and September 24, 2016. 2016 2017 Acid-Test Ratio Current Ratio $ millions Current Ratio Acid-Test Ratio Current assets Cash and equivalents Short-term marketable sec Accounts receivables, net Inventories, net Vendor non-trade receivables Other current assets Total current assets Total quick assets Total current liabilities Ratio TILL LULUI yuuus PILIHUOLU TUL MIL yLUI LIIULU PLIIDU JU, LUH. 2 Compute the current ratio and acid-test ratio as of September 30, 2017, and September 24, 2016. 3. Does Apple's 2017 current ratio outperform or underperform the (assumed) industry average of 1.5? 4. Does Apple's 2017 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 Does Apple's 2017 current ratio outperform or underperform the (assumed) industry average of 1.5?. ces Apple's 2017 current ratio HILL LVSLUI yvuus PILI ILIVI VIL Y LUE LLUMLILI JV, LVI. 2. Compute the current ratio and acid-test ratio as of September 30, 2017, and September 24, 2016. 3. Does Apple's 2017 current ratio outperform or underperform the assumed) industry average of 1.5? 4. Does Apple's 2017 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 Does Apple's 2017 acid-test ratio outperform or underperform the assumed) industry average of 1.02 Apple's 2017 acid test ratio 9 Aug 14 300 Accounts payable Aron Cash 300 10 Aug 15 5,508 Cash Sales discounts ccounts receivable--Baird 92 5,600 11 > Aug 18 7,000 Accounts payable-Waters Merchandise inventory Cash 65 6.435 12 Aug 19 4,800 Accounts receivable-Tux Sales > 4.800 13 Aug 19 2.400 Cost of goods sold Merchandise inventory 2.400 A-2 Appendix A Financial Statement Information September 24, 2016 $ Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 30, 2017 ASSETS Current assets Cash and cash equivalents 20.289 Short-term marketable securities 53,892 Accounts receivable, less allowances of $58 and $53, respectively 17.874 Inventories 4,853 Vendor non-trade receivables 17.799 Other current assets 13,936 Total current assets 128,645 Long-term marketable securities 194,714 Property, plant and equipment, net 33,783 Goodwill 5.717 Acquired intangible assets.net 2.298 Other non-current assets 10,162 Total assets 375,319 20.484 46,671 15.754 2.132 13.545 8,283 106,869 170,430 27.010 5.414 3,206 8,757 321.686 LIABILITIES AND SHAREHOLDERS' EQUITY 19.049 Current liabilities Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term det Total current liabilities Deferred revenue, non cur Long-term dett Other current les 7.5445 11.977 37.294 22,027 BONO 8.105 1500 79.000 2.930 75,427 160 TOLNA 2.836 070207 10.15 241.372 2/17 Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets 33.783 5,717 2,298 10,162 375,319 27,010 5.414 3,206 8,757 321.686 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities nts 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 49.049 25.744 7,548 11.977 6,496 100,814 2.836 97.207 40,415 241.272 37 294 22,027 8,080 8,105 3.500 79,006 2.930 75.427 36,074 193,437 Shareholders equity Common stock and additional paid in capital, 50.00001 par value: 12,600,000 shares authorized. 5.126,201 and 5,336,166 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income (los) Total shareholders' equity Total liabilities and shareholders' equity See accompanying Notes to Consolidated Financial Statements, 35,867 98,11 (150) 1:34.047 37519 31.251 96,364 634 128.249 321.680 S September 26, 2015 233,715 140,089 93,626 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, 2017 September 24, 2016 Net sales 229,234 215,639 Cost of sales 141,048 131,376 Gross margin 88,186 84,263 Operating expenses Research and development 11,581 10,045 Selling, general and administrative 15.261 14,194 Total operating expenses 26,842 24,239 Operating income 61,344 60,024 Other income (expense), net 2.745 1,348 Income before provision for income taxes 64,089 61.372 Provision for income taxes 15.738 15.685 Net income 48,351 45.687 8,067 14.329 22.396 71.230 1,285 72.515 19.121 53,394 9.27 9.21 8.35 8.31 9.28 9.22 Earnings per share Basic Diluted Shares used in computing carnings per share Basic Diluted Cash dividends declared per share 5.217.242 5.251.692 2.-10 5.470.820 5.500.281 2.18 5.753,421 5.793,069 1.98 See accompanying Notes to Consolidated Financial Statements Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions Years ended September 30, 2017 September 24, 2016 Net income 48.151 45.687 Other comprehensive income Change in foreign currency translation net of taxelects of 50771 and 5201, respectively Change in need is derivative Instruments: Change in tale of denies net of been expenses September 26, 2015 32304 Sec accompanying Notes to Consolidated Financial Statements. s Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 30, 2017 September 24, 2016 September 26, 2015 Net income s 48,351 45,687 53,394 Other comprehensive income (loss): Change in foreign currency translation, net of tax effects of $(77), 58 and $201. respectively 224 75 (411) Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of $(478), $(7) and 5(441), respectively 1,315 7 2.905 Adjustment for net (gains) losses realized and included in net income, net of tax expense (benefit of $475.5131 and 5630, respectively (1,477) (741) (3.497) Total change in unrealized gains/losses on derivative instruments, net of tax (162) (734) 592) Change in unrealized yainvlosses on marketable securities Change in fair value of marketable securities, net of tax benefit (expense of $425, 5(863) and $264, respectively (782) 1.382 Adjustment for net(gains) losses realized and included in net income, net of tax expense benefit of $35. 31), and $(32), respectively (64 56 59 Total change in unrealized gain losses on marketable securities, net of tax (846) 1.638 (424) Total other comprehensive income (los) (784 979 (1.427) Total comprehensive income S 47.567 46,666 51.967 See accompanying Notes to Consolidated Financial Statements om/Media/Connect_Production/bne/wild_fap_24e/appendix A.pdf Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Common Stock and Comprehensive Total Additional Paid-In Capital Retained Income Shareholders Shares Amount Earnings (Loss) Equity Balances as of September 27, 2014 5,866,161 S 23,313 5 87,152 S 1.082 S 111.547 Net income 53,394 53,394 Other comprehensive income (loss) (1,427) (1,427) Dividends and dividend equivalents declared (11.627) (11,627) Repurchase of common stock (325,032) (36,026) (36,026) Share-based compensation 3.586 3.586 Common stock issued, net of shares withheld for employee taxes 37.624 (231) (609) (840) Tax benefit from equity awards, including transfer pricing adjustments 748 748 Balances as of September 26, 2015 5.578.753 27.416 S 92.284 s (345) s 119,355 Net income 45.687 45.687 Other comprehensive income (los) 979 979 Dividends and dividend equivalents declared (12.188) (12.188) Repurchase of common stock (279,609) (29.000 (29.000) Share-based compensation 4.262 4.262 Common stock issued, net of shares withheld for employee taxes 37.022 (806) (419) (1.225) Tax benefit from equity awards, including transfer pricing adjustments 379 379 Balances as of September 24, 2016 5.336.166 S 31,251 96.164 s 6,345 128.249 Net income 48,351 48.351 Other comprehensive income closs) (784) (780) Dividends and dividend equivalents declared 12.03 (12.803) Repurchase of common stock (33.001 13.00 Share-based compensation 4.000 4.909 Common stocked, net of shares withheld for employees 36,511 (913 1581 1.191 Tax benefit from equity awards, including transfer pricing adjustments 620 Balance of September 2017 5.12.201 11.07 Se companying Notes to consolidated Financial Statements September 26, 2015 $ 13,844 53,394 11,257 3,586 1.382 385 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years ended September 30, 2017 September 24, 2016 Cash and cash equivalents, beginning of the year $ 20,484 21,120 Operating activities: Net income 48.351 45,687 Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization 10.157 10.505 Share-based compensation expense 4,840 4,210 Deferred income tax expense 5,966 4,938 Other (166) 486 Changes in operating assets and liabilities: Accounts receivable.net (2.093) 527 Inventories (2.723) 217 Vendor non-trade receivables (4,254) (51) Other current and non-current assets (5,318) 1,055 Accounts payable 9,618 1.837 Deferred revenue (626) (1.554) Other current and non-current liabilities (2.033 Cash generated by operating activities 63.598 65.824 Investing activities Purchases of marketable securities (159.486) (142.28) Proceeds from maturities of marketable securities 31.775 21.258 Proceeds from sales of marketable securities 94.564 90.536 Payments made in connection with business acquisitions, net (329) (297) Payments for acquisition of property, plant and equipment (12.451) (12.734) Payments for acquisition of intangible assets (44) (814) Payments for strategie investments.net (395) (1.388) Other 220 (110) Cash used in investing activities (46,416 (45.9773 Financing activities Proceeds from issuance of common stock 355 Excels tax benefits from equity awards 027 107 Payments for taxes related to net share settlement of equity awards (1.174 (1.5701 Payments for dividends and dividend equivalents (12.709 12.150 Repurchases of common stock 33.000 29.722 417 (238) (3.735) (283) 5.001 1,042 9.058 81.266 (154) (166.402) 14.538 107,447 (11.247) (241) (26) (56.27 5. 749 11.561 (35.231