Please assist with the calcuations.
Assignment Steps
Select a multinational company from the following industries: Retail, Pharmaceutical, Computer Hardware, Manufacturing, Automotive
Review the selected company's most recent financial statements. Calculate the following cash conversion cycle ratios based on the financial statements using Microsoft Excel:
Average inventory
Inventory turnover rate
Average account receivable
Account receivable turnover
Average collection cycle
Explain in 700 words the importance of the cash conversion cycle, including:
Discuss the purpose of the cash conversion cycle and its components.
Analyze the results obtained in the cash conversion cycle equations.
Propose strategies to increase the cash flows of the company under study.
Apple Inc CONDENSED CONSOUDATED STATEMENTS OF CASH FLOWS (Unaudited) In millions) Twelive Months Ended September 29, September 30, 2018 Cash and cash equivalents, beginning of the period Operating actvities: Net income Adjustments to reconale net income to cash generated by operating activities: 9.531 48,351 Depreciation and amortization 10.903 10,157 Deferred income tax expense/l(benefit) 5,966 (166) Changes in operating assets and liablities Accounts receivable, net (2,723) 8,010) Vendor non-trade receivables Oher current and non-oument assets Accounts payable Defered revenue Oher current and non-ourent lablities (5.318) 8,966 9,175 (44) 38.490 77.434 1,125 Cash generated by operating activitios Investing actties: Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments for acquisition of property, plart and equipment Payments made in connection with business acquisitions, net Purchases of non-marketable securities Proceeds from non-marketable securdies (71,356) 55.881 47.,838 (13,313) (159,486) 31,775 94,564 (12451) 721) (1,871) 521) 126 Cash generated by(used in) investing activites Financing activities Proceeds from is suance of common stock Payments for taxes related to net share setlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from is suance of term debt net Repayments of term debt Change incommercial paper, net (1,874) (12.769) 13,712) (72.738) 6969 28,662 3,852 Cash used in fnancing activities 195) Increasel (Decrease) in cash and cash equivalents Cash and cash equivalents, end of the period Supplemental cash low disclosure: 5.624 Cash paid for incame taxes, net Cash paid for interest 10.417 $ 3,022 $ 11,591 Apple Inc CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In milions, excapt number of shares which are refected in thousands and par value) 2017 ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assets 25913 S 40,388 23,186 3,956 25,809 12,087 131,339 20.289 53.892 17.874 4,855 7,799 13.936 128,645 Total current assets Marketable securities Property, plant and equipment, net Other non-current assets 170,799 41,304 22 283 234,386 94.714 33.783 18.177 246.674 Total non-current assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current labities: Acoounts payable Other current iabilties Dele red venue Commercial paper Term deb 55,888 S 32687 7,543 11,964 8,784 44,242 30.551 7.548 11,977 6.496 100.814 Total current liabilnies 116,866 Deferred revenue Tern debt Other non-currert liabilties 2797 93,735 45, 180 2,836 97.207 40.415 Total non-current labilities 140.4 Total labilities Shareholders' equity Common stock and addtional paid-in capital, $0.00001 par value: 12,600,000 shares 40,201 70,400 454 107,147 35.867 authorized: 4,754.988 and 5126,201 shares issued and outstanding, respectively Retained earnings 98.330 Total shareholders' equity 134 047 Total labilities and shareholders equity Apple Inc CONDENSED CONSOUDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions, except number of shares which are refected in thousands and per share amourts) Three Months Ended Twelve Months Ended 2018 2017 2018 2017 Net sales 52,579 $ 265,595 $229,234 163.756 101,839 Cost of sales ( 38.816 32.648 141,048 Gross margin 24,084 19,931 88.186 Operating expenses: Research and development (t Selling, general and administrative 3,750 4,216 2,997 3,814 14,236 16.705 941 11,581 15,261 Total operating expenses Operating incame Oher income/(expense), net Income before provision for income taxes Provision for income taxes Net income 16,118 303 16421 2.296 14,125 13,120 797 13,917 3,203 714 70,898 2.005 72.903 13.372 59,531 61,344 2,745 64,089 15,738 48,351 Earnings per share: 2.94 $ 2.91 S 2.08 S 2.07 $ 12.01 S 11.91 $ 9.27 Diauted 9.21 Shares used in computing eamings per share Basic 4.801, 589 5,149.428 ,955,377 5,217,242 Dialuted 4,847,547 5,183585 5,000,109 5,251,692 Cash dividends declared per share 0.73 $ 0.63 $ 2.72 $ 2.40 t Includes share-based campensation expense as tollows Cost of saes Research and development Selling, general and administrative 251 $ 681 S 413 S 215 S 569 S 390 S 1,010 $ 2,668 S 1,662 $ 877 2,299 1,664 Apple Inc CONDENSED CONSOUDATED STATEMENTS OF CASH FLOWS (Unaudited) In millions) Twelive Months Ended September 29, September 30, 2018 Cash and cash equivalents, beginning of the period Operating actvities: Net income Adjustments to reconale net income to cash generated by operating activities: 9.531 48,351 Depreciation and amortization 10.903 10,157 Deferred income tax expense/l(benefit) 5,966 (166) Changes in operating assets and liablities Accounts receivable, net (2,723) 8,010) Vendor non-trade receivables Oher current and non-oument assets Accounts payable Defered revenue Oher current and non-ourent lablities (5.318) 8,966 9,175 (44) 38.490 77.434 1,125 Cash generated by operating activitios Investing actties: Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments for acquisition of property, plart and equipment Payments made in connection with business acquisitions, net Purchases of non-marketable securities Proceeds from non-marketable securdies (71,356) 55.881 47.,838 (13,313) (159,486) 31,775 94,564 (12451) 721) (1,871) 521) 126 Cash generated by(used in) investing activites Financing activities Proceeds from is suance of common stock Payments for taxes related to net share setlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from is suance of term debt net Repayments of term debt Change incommercial paper, net (1,874) (12.769) 13,712) (72.738) 6969 28,662 3,852 Cash used in fnancing activities 195) Increasel (Decrease) in cash and cash equivalents Cash and cash equivalents, end of the period Supplemental cash low disclosure: 5.624 Cash paid for incame taxes, net Cash paid for interest 10.417 $ 3,022 $ 11,591 Apple Inc CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In milions, excapt number of shares which are refected in thousands and par value) 2017 ASSETS Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assets 25913 S 40,388 23,186 3,956 25,809 12,087 131,339 20.289 53.892 17.874 4,855 7,799 13.936 128,645 Total current assets Marketable securities Property, plant and equipment, net Other non-current assets 170,799 41,304 22 283 234,386 94.714 33.783 18.177 246.674 Total non-current assets Total assets LIABILITIES AND SHAREHOLDERS' EQUITY Current labities: Acoounts payable Other current iabilties Dele red venue Commercial paper Term deb 55,888 S 32687 7,543 11,964 8,784 44,242 30.551 7.548 11,977 6.496 100.814 Total current liabilnies 116,866 Deferred revenue Tern debt Other non-currert liabilties 2797 93,735 45, 180 2,836 97.207 40.415 Total non-current labilities 140.4 Total labilities Shareholders' equity Common stock and addtional paid-in capital, $0.00001 par value: 12,600,000 shares 40,201 70,400 454 107,147 35.867 authorized: 4,754.988 and 5126,201 shares issued and outstanding, respectively Retained earnings 98.330 Total shareholders' equity 134 047 Total labilities and shareholders equity Apple Inc CONDENSED CONSOUDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions, except number of shares which are refected in thousands and per share amourts) Three Months Ended Twelve Months Ended 2018 2017 2018 2017 Net sales 52,579 $ 265,595 $229,234 163.756 101,839 Cost of sales ( 38.816 32.648 141,048 Gross margin 24,084 19,931 88.186 Operating expenses: Research and development (t Selling, general and administrative 3,750 4,216 2,997 3,814 14,236 16.705 941 11,581 15,261 Total operating expenses Operating incame Oher income/(expense), net Income before provision for income taxes Provision for income taxes Net income 16,118 303 16421 2.296 14,125 13,120 797 13,917 3,203 714 70,898 2.005 72.903 13.372 59,531 61,344 2,745 64,089 15,738 48,351 Earnings per share: 2.94 $ 2.91 S 2.08 S 2.07 $ 12.01 S 11.91 $ 9.27 Diauted 9.21 Shares used in computing eamings per share Basic 4.801, 589 5,149.428 ,955,377 5,217,242 Dialuted 4,847,547 5,183585 5,000,109 5,251,692 Cash dividends declared per share 0.73 $ 0.63 $ 2.72 $ 2.40 t Includes share-based campensation expense as tollows Cost of saes Research and development Selling, general and administrative 251 $ 681 S 413 S 215 S 569 S 390 S 1,010 $ 2,668 S 1,662 $ 877 2,299 1,664
