Part I: Understanding financial statements in detail
1. From the beginning of 2000 to its peak in 2012, Apples stock price increased by more than 25 times, from $27.97 to $702.10. Examine ONLY the financial reports (in the appendices) and identify areas that were responsible for this stock performance.
2. From its peak in September 2012 to the end of March 2013, Apples stock price fell by 37%, from $702.10 to $442.66. Examine ONLY the financial reports (in the appendices) and identify areas that were responsible for this stock performance.
Appendices 69-Dec-2021 23:34 Apple Inc | Income Statement Income Statement Annual Common Size (% of Sales) 2007 2013 2006 NA 2011 67 97 90 Earnings Quality Score Period End Date 30-Sep-2006 100.00% 29-Sep-2007 100.00% 28-Sep-2013 100.00% Revenue Net Sales 100.00% 100.00% 71.02% 71.02% 28.98% 2008 97 27-Sep-2008 100.00% 100.00% 100.00% 64.80% 64.80% 35.20% 100.00% 100.00% % 66.83% 66.83% 2009 97 26-Sep-2009 100.00% 100.00% 100.00% 59.86% 59.86% 40.14% 2010 91 25-Sep-2010 - 100.00% 100.00% 100.00% 60.62% 60.62% % 39.38% Total Revenue Cost of Revenue, Total Cost of Revenue Gross Profit 2012 67 29-Sep-2012 100.00% 100.00% 100.00% 56.13% 56.13% 43.87% 24-Sep-2011 100.00% 100.00% 100.00% 59.52% 59.52% 40.48% 100.00% 100.00% 62.38% 62.38% 37.62% 33.17% 10.03% 8.46% 7.02% 12.60% 12.60% 3.69% 12.06% 12.06% 9.67% 9.67% 6.34% 5.76% 10.03% 2.96% 8.46% 2.73% 6.42% 6.42% 2.16% 7.02% 2.24% 3.18% 3.11% 2.62% 72.64% 87.30% 12.70% 2.04% 2.04% 82.07% 17.93% 2.63% 2.63% 77.79% 22.21% 1.74% 1.74% 27.36% 0.95% 0.95% 71.81% 28.19% 0.48% 0.48% 68.78% 31.22% 0.48% 0.48% 64.70% 35.30% 0.70% 0.70% Selling/General/Admin. Expenses, Total Selling/General/Administrative Expense Research & Development Depreciation/Amortization Interest Expense, Net - Operating , Total Operating Expense Operating Income Interest/Invest Income - Non-Operating Interest Income - Non-Operating Investment Income - Non-Operating Interest Inc.(Exp.), Net-Non-Op., Total ( Other, Net , Other Non-Operating Income (Expense) Net Income Before Taxes Provision for Income Taxes Net Income After Taxes Net Income Before Extra. Items Net Income - 0.48% 0.70% 2.63% -0.20% -0.20% 0.95% -0.19% -0.24% -0.24% 0.00% 2.04% -0.15% -0.15% 14.59% 4.29% 10.30% 10.30% 10.30% -0.19% 1.74% -0.09% -0.09% 23.86% 7.54% 16.32% 0.48% -0.10% -0.10% 31.60% 7.65% 71.33% 28.67% 0.77% 0.95% -0.18% 0.69% -0.01% -0.01% 29.35% 7.68% 21.67% 21.67% 21.67% 20.37% 6.15% 14.22% 28.12% 8.93% 19.19% 19.19% 19.19% -0.36% -0.36% 35.63% 8.96% 26.67% 26.67% 26.67% 28.42% 6.94% 21.48% 21.48% 21.48% 14.22% 14.22% 16.32% 16.32% 23.95% 23.95% 23.95% Figure 1: Common size Income Statement 2006 - 2013 09-Dec 2021 23.35 Apple Inc Balance Sheet Balance Sheet Annual Common Size (% of Total Assets) 2008 2009 2010 2013 2006 NIA 30-Sep-2006 2007 97 2011 67 97 97 91 2012 67 29-Sep-2012 90 29-Sep-2007 27-Sep-2008 26-Sep-2009 25-Sep-2010 24-Sep-2011 28-Sep-2013 19.59% Earnings Quality Score Period End Date Assets ($ Millions) 5 Cash and Short Term Investments Cash Cash & Equivalents Short Term Investments Accounts Receivable - Trade, Net , Total Receivables, Net Total Inventory Total Current Assets 22.30% 2.49% 58.76% 1.16% 35.99% % 21.61% 16.54% 1.77% 60.70% 1.01% 35.89% % 23.81% 6.46% 49.40% 2.40% 8.68% 61.13% 1.02% 31.81% 28.30% 6.70% 34.08% 2.25% 12.73% 5.94% 4.34% 4.21% 2.68% 12.70% 6.33% 38.32% 19.10% 7.33% 13.87% 4.61% 10.44% 6.21% 7.28% 7,08% 16.54% 15.90% 1.37% 86.62% 13.00% 1.41% 10.65% 0.96% 1.57% 84.33% 13.20% 1.40% 55.44% 10.07% 0.67% 38.66% 10.62% 0.45% 32.75% 9.97% 0.85% 35.40% 82.96% 66.43% 12.06% 10.36% 9.62% 13.78% 4.42% 3.64% 4.00% 7.45% 0.22% Property/Plant/Equipment, Total - Gross Buildings. Gross Land/Improvements. Gross Machinery/Equipment - Gross Property/Plant/Equipment, Total - Net Goodwill, Net LT Investments - Other Total Assets 11.21% 4.02% 3.01% 4.18% 7.23% 0.15% 9.83% 3.51% 2.01% 4.31% % 12.43% 1.97% % 1.39% 3.66% 2.24% 4.46% 6.79% 0.57% 2.70% 1.96% 4.97% 10.11% 2.23% 1.77% 6.11% BRE 6.68% 6.22% 6.34% 9.08% 8.78% 0.64% 1.92% 1.60% 10.26% 02 8.02% 0.76% 51.31% 100.00% 0.77% 0.43% 22.16% 100.00% 0.99% 33.77% 100.00% 6.58% 100.00% 47.79% 52.32% 100.00% 100.00% 100.00% 100.00% 19.70% 11.79% 15.98% 9.46% 13.08% 9.71% Liabilities (5 Millions) 5 ) Accounts Payable Other Current liabilities, Total Customer Advances Income Taxos Payable Total Current Liabilities 19.61% 13.96% 7.64% 1.93% 36.61% 15.26% 12.50% 6.35% % 1.40% 31.41% 6.06% 2.26% 12.03% 8.00% 4.23% 10.81% 7.98% 4.20% 12.57% 9.38% 5.27% 0.98% 24.04% 4.80% 0.91% 24.22% 4.85% 0.88% 27.56% 0.87% 21.89% 0.58% 21.09% 37.45% 0.00% 0.00% Total Long Term Debt Long Term Debt Total Debt 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 42.67% 0.00% 0.00% 0.00% 38.36% 0.00% 0.00% 0.00% 36.43% 0.00% 0.00% 0.00% 32.86% 8.19% 8.19% 8.19% 40.31% 0.00% 0.00% Total Liabilities 0.00% 34.16% 41.97% 33.39% Figure 2: Common size Balance Sheet 2006 - 2013 Apple Inc Income Statement 09-Dec-2021 23:35 Income Statement Annual Standardised in Millions of U.S. Dollars 2006 2007 2008 2009 2010 2011 2012 2013 Period End Date 30-Sep-2006 19,315 29-Sep-2007 24,578 27-Sep-2008 37,491 26-Sep-2009 42,905 25-Sep-2010 65,225 24-Sep-2011 108,249 29-Sep-2012 156,508 Revenue 28-Sep-2013 170,910 170,910 Net Sales 19,315 24,578 37,491 42,905 65,225 108,249 156,508 Total Revenue 19,315 24,578 37,491 42,905 65,225 108,249 156,508 170,910 13,717 16,426 24,294 25,683 39,541 64,431 87,846 106,606 Cost of Revenue, Total Cost of Revenue Gross Profit 13,717 16,426 25,683 39,541 64,431 87,846 106,606 24,294 13,197 5,598 8,152 17,222 25,684 43,818 68,662 64,304 2,433 2,963 3,761 4,149 5,517 7,599 10,040 10,830 2,433 2,963 3,761 4,149 5,517 7,599 10,040 9,844 712 782 1,109 1,333 1,782 2,429 3,381 4,475 Selling/General/Admin. Expenses, Total Selling/General Administrative Expense Research & Development Total Operating Expense Operating Income Interest Inc.(Exp.), Net-Non-Op., Total Net Income Before Taxes 16,862 20,171 29,164 31,165 46,840 74,459 101,267 121,911 2,453 4,407 8,327 11,740 18,385 33,790 55,241 48,999 394 647 653 407 311 519 1,088 1,180 2,818 5,006 8,947 12,066 18,540 34,205 55,763 50,155 Provision for Income Taxes 829 1,511 2,828 3,831 4,527 8,283 14,030 13,118 Net Income After Taxes 1,989 3,495 6,119 8,235 14,013 25,922 41,733 37,037 Net Income Before Extra. Items 1,989 3,495 6,119 8,235 14,013 25,922 41,733 37,037 37,037 Net Income 1,989 3,495 6,119 8,235 14,013 25,922 41,733 Figure 3: Income Statement 2006 - 2013 2007 2008 2013 2009 26-Sep-2009 2010 25-Sep-2010 2011 24-Sep-2011 -- 2012 29-Sep-2012 29-Sep-2007 1 27-Sep-2008 28-Sep-2013 15,386 22.111 10,236 23,464 18,201 25,620 14,359 25,952 16,137 29,129 18,383 6,034 40,546 26,287 20,641 4,029 4,704 5,057 9,924 11.717 18,692 1.696 6,348 7,762 7,539 Apple Inc Balance Sheet 09-Dec-2021 23:35 Balance Sheet Annual Standardised in Millions of U.S. Dollars 2006 Period End Date 30-Sep-2006 Assets (5 Millions) Cash and Short Term Investments 10.110 Short Term Investments 3,718 Total Receivables, Net 2,845 Receivables. Other . 1,593 Total Inventory 270 Other Current Assets, Total 1,076 Total Current Assets 14,509 Property/Plant Equipment, Total - Gross 2,075 Buildings - Gross 760 Land/Improvements - Gross 626 Goodwill, Net 38 Intangibles, Net 139 Long Term Investments Total Assets 17,205 2,392 346 2.282 509 4,414 1,051 455 776 791 1,764 2.207 2.270 5,083 6,543 9,041 10,335 1,778 21,956 30,006 44,988 57,653 73,286 31,555 4,667 41,678 7.234 2,841 3,747 11,768 2,599 21,887 3,464 28,519 3,968 1,019 1,324 1,665 2,030 1,471 762 810 955 2,059 2,439 1,135 3,309 1,577 38 207 206 741 896 382 352 353 342 3,536 4,224 55,618 2,379 36,171 10,528 47,501 25,391 75,183 92,122 176,064 4,179 106,215 207.000 25,347 116,371 3,390 4,970 5,520 5,601 12,015 14,632 21,175 22,367 2,250 3,538 4,521 4,612 7.114 16,509 10,910 6.129 14,084 7,445 1,042 1,936 2,278 3,647 8,697 Liabilities (5 Millions) 5 Accounts Payable Other Current liabilities, Total Customer Advances Income Taxes Payable Total Current Liabilities Total Long Term Debt Long Term Debt Total Liabilities 388 2,298 506 11,361 488 9,280 430 658 20,722 1,140 27,970 1,535 38,542 1,200 43,658 6,443 11,506 0 0 0 0 0 0 0 16,960 0 0 0 0 0 0 0 16,960 0 13,874 7,221 10,815 15,861 27,392 39,756 57,854 83,451 4,355 5,368 7,177 8.210 10,668 13,331 19,764 Shareholders Equity (5 Millions) Common Stock, Total Retained Earnings (Accumulated Deficit) Total Equity Total Liabilities & Shareholders' Equity 16,422 101,289 5,607 9,101 15,129 23,353 104,256 62,841 76,615 22,297 9,984 17,205 123,549 37.169 47.791 75,183 14,532 25,347 31,640 47.501 118,210 176,064 36,171 116,371 207.000 Figure 4: Balance Sheet 2006 - 2013 09-Dec 2021 23.36 Apple Inc Cash Flow Cash Flow Annual Standardised in Millions of U.S. Dollars 2006 2007 2011 2012 2008 27-Sep-2008 2009 26-Sep-2009 nie 2010 25-Sep-2010 30-Sep-2006 29-Sep-2007 24-Sep-2011 29-Sep-2012 1,989 3,495 6,119 14,013 8,235 734 25,922 1,814 225 327 496 1,027 41,733 3,277 3,277 4,405 225 327 496 734 1,027 1,814 53 73 398 1.040 1,440 2,868 Period End Date Cash Flow-Operating Activities (5 Millions) Net Income/Starting Line Depreciation Depletion Depreciation Deferred Taxes Changes in Working Capital Accounts Receivable Inventories Other Assets Accounts Payable Other Liabilities Cash from Operating Activities -221 1,321 2,045 -586 1,212 5,757 -299 -357 -385 -785 -939 -1,791 -4,860 -596 -6,965 -15 -76 -163 54 275 -105 -2,666 -994 15 -153 -3,162 -1,634 6,307 - 1,391 2,515 1.611 1,494 596 92 4,467 1,282 2,382 360 6,149 1,296 2.220 1,995 18,595 5,376 50,856 5.470 9,596 10,159 37,529 -657 -986 -1,199 -1,213 -2,121 -7,452 -9,402 -657 -735 -1,091 -1.144 -2,005 -4,260 0 -251 -108 -69 -116 -3,192 Cash Flow-Investing Activities (5 Millions) 5 Capital Expenditures Purchase of Fixed Assets Purchase/Acquisition of Intangibles Other Investing Cash Flow Items, Total Acquisition of Business Sale/Maturity of Investment Purchase of Investments Cash from Investing Activities -8,295 - 1,107 -38,825 1,014 -2.263 -6.990 - 16,221 -11,733 -32,967 0 0 -220 -638 -244 69,853 -350 112,805 8.312 0 0 30,678 -46.825 9,424 16,243 46,718 -7.280 - 11,736 -23,003 -57,811 -102,317 -151,232 357 -3,249 -8.189 - 17,434 - 13,854 -40,419 -48,227 361 374 633 188 345 613 125 Cash Flow-Financing Activities (5 Millions) Financing Cash Flow Items Other Financing Cash Flow Total Cash Dividends Paid Cash from Financing Activities 361 374 633 188 345 613 125 0 -2,488 -1,698 324 739 1,116 663 1,257 1,444 Free Cash Flow 1,563 4,484 8.397 8,946 16,474 30,077 41,454 Figure 5: Cash Flow Statement 2006 - 2012 2007 2008 2009 2010 2011 2013 2012 390 197 247 273 - 357 416 33.20% 35.20% 40.10% 40.50% 43.90% 37.60% 39.40% 28.20% 22.20% 27.40% 31.20% 35.30% 23.90% 28.10% 28.40% 17.90% 20.40% % 30.20% 14. 20% 31.60% 24.20% 35.60% 25.20% 28.70% 29.30% 26.20% 31.60% 31.80% 24.40% 21.50% 16.30% 19.20% 23.90% 26.70% 21.70% 0.89 1.16 1.22 1.03 1.06 1.13 1.07 23.50% 29.10% 28.80% 30.20% 35.70% 26.20% 38.10% 42.80% 28.50% 33.20% 30.50% 35.30% 41.70% 30.60% 28.50% 33.20% 30.50% 35.30% 41.70% 40.30% % 21.90% 2.33 2.6 2.7 1.96 1.58 1.48 1.64 Apple Inc Ratios - Key Metrics 09-Dec-2021 23:36 Ratios. Key Metrics Annual Standardised in Millions of U.S. Dollars Industry Median 2006 # Stores 165 Gross Margin 40.80% 29.00% Operating Margin 6.60% 12.70% Pretax Margin 3.70% 14.60% Effective Tax Rate 11.20% 29.40% Net Margin 3.10% 10.30% Asset Turnover 0.75 1.35 Pretax ROA 3.30% 19.60% ROE 5.70% 22.80% Reinvestment Rate 3.80% 22.80% Liquidity Quick Ratio 1.01 2.21 Current Ratio 1.61 2.25 Times Interest Earned 4.7 - Cash Cycle (Days) 67.4 -28.1 Leverage Assets/Equity 2.4 1.72 Debt Equity 0.07 0 % LT Debt to Total Capital 24.50% 0.00% Operating A/R Turnover R 5.9 10.3 Avg. A/R Days 62.1 35.9 Inv Turnover 5.9 63.1 Avg. Inventory Days 62.1 5.9 Avg. A/P Days . A 74.3 69.9 Fixed Asset Turnover 7.59 18.41 WC / Sales Growth -0.90% ROIC 21.20% 2.37 2.64 2.74 2.01 1.61 1.5 1.68 - 360.3 -28.1 -34.9 -29.8 -30.6 32.3 -33.7 -35.6 1.74 1.62 1.5 1.57 1.52 1.49 1.68 0 0 0 0 0 0 0.14 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 12.10% 7.2 8.8 8.7 10.3 8.7 8.6 42.4 10 36.4 50.9 41.4 41.8 41.9 35.4 112.1 53.3 56.8 533 52.5 70.5 83.4 6.8 6.9 5.2 3.2 4.4 6.4 78.6 6.8 78.8 92.6 81.1 75.3 74.2 74.3 17.49 15.86 16.89 17.26 13.48 10.67 -1.70% 15.79 3.70% % 26.10% 3.30% - 13.70% -13.90% 2.70% -0.40% 29.90% -6.00% 36.90% 27.10% 31.00% 36.30% 24.60% Figure 6: Select Ratios 2006 - 2013 Templates Daily T 2 USD APPLE INC 175,08 3.90 (*2 28%) S&P 500 TOT RET 9842683430.49820.31%) USD- 3000.0000 M25.00 2920. 1848 WAL 2800.0000 23.00 2700.0000 " 21.00 2600.0000 2500.0000 19.00 m 2400.0000 manque hennar 17.00 2300.0000 mas 15.89 2200,0000 15.00 2100.0000 2000.0000 13.00 1900.0000 11.00 1800.0000 Apr Jul Sep 2013 Ape Z 2011 Apr 1D SD 10D 1M 3M 6m YTD 1y 6M 1Y Jul Oct 2012 2Y 3Y 5 10Y 20Y Max 5Y O 01-Dec-2010 - 29-May-2013 m Figure 7: Apple vs S&P 2011-2013
