Please read the select annual financial statements of Apple Inc. in 2018 and evaluate the performance following the required. All numbers in the financial data are in millions. All ratios should be decimals and 2 decimal places are required, e.g. 0.25; the calculation process is needed in this case (if any). (18 marks)

Total Net Sales:	$ 265,595
Total Costs of Sales:	$ (163,756)
Gross Margin:	$ 101,839
Total Expenses:	$ (30,941)
Other Income:	$ 2,005
Income Taxes:	$ (13,372)
Net Income:	$ 59,531
Total Assets:	$ 365,725
Total Liabilities:	$ 258,578
Total Equity:	$ 107,147

Required:

Question a) Please calculate the return on equity (ROE, using net income) for Apple Inc. in 2018. (2 marks)

Question b) Please calculate the return on assets (ROA, using net income) for Apple Inc. in 2018. (2 marks)

Question c) Please following DuPont Analysis Model decompose the ROA calculated in question b) into profitability of sales (net income per dollar of revenue) and investment efficiency (revenues per dollar of assets). (4 marks)

Question d) Suppose the leverage remain unchanged and the target ROE in 2019 is 60%, what is the required ROA in 2019? (3 marks)

Question e) If you were the CFO of Apple Inc. and the compensation the scheme in 2019 is as follows:

• Salary: $ 15,000,000
• Invariant Bonus: $3,000,000
• Variant Bonus:
  • $5,000,000 if the ROE >= 65%;
  • $3,000,000 if 60%<=ROE<65%;
  • no bonus otherwise.

Suppose the profitability of sales (net income per dollar of revenue) is 25% and investment efficiency (revenues per dollar of assets) is 80%, while leverage remain constant, in 2019. Whats your total compensation in 2019? (5 marks)

Question f) Considering the increase in profitability in 2019 is due to excessive production and promotions, which greatly reduces the costs of goods by achieving scale economies will decrease the revenue in 2020, if you are the shareholder of Apple Inc., how do you propose a revision on the executive managers compensation to focus management on long-term growth (2 marks)?