Purpose:

• To find and identify appropriate sources of information.
• To learn how to read financial statements.
• To evaluate the financial condition of an organization using ratio analysis.
• To reach conclusions using logic and evidence.

Background:

In the first assignment this quarter, I asked which companies you were interested in learning about. Many of you said Apple.

On Tuesday, March 8th, Apple unveiled updated versions of several of its products. This New York Timesarticle(Links to an external site.)reminds us that over the years, the number of products the company offers has grown significantly. But products are not the only source of revenue for the company.

The 10K for the fiscal year ending September 28, 2019 is the first time that Apple showed Net Sales separated into Product and Services on its Consolidated Statement of Operations:

			Years ended:
		September 28, 2019	September 29, 2018	September 30, 2017
Net sales ($ in millions)
Products		$ 213,883	$ 225,847	$ 196,534
Services		$ 46,291	$ 39,748	$ 32,700
Total net sales		$ 260,174	$ 265,595	$ 229,234

Source: https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/1a919118-a594-44f3-92f0-4ecca47b1a7d.pdf(Links to an external site.)

From 2017 to 2019, income from products grew by less than 10%. Income from services grew by more than 40%.

What does the company's mix of products and services look like now? What strategic decisions has the company made recently? The company's shift to offering a range of products and services is worth examining.

In this essay, you will describe the various products and services that Apple offers. You will examine some recent financial results for the company, including Apple's income from products and services. You'll also discuss Apple's recent financial results using a few commonly used financial ratios. After reading recent articles about Apple and analyzing the company's recent financial results, you'll consider what changes the company has made and how it might change in the future.

Preparation:

1. ReviewSection 9-2a Using Ratio Analysis to Identify Current Strengths and Weaknessesin your textbook.
2. Pay particular attention to Exhibit 9.2 which shows how to calculate some of the key financial ratios.
3. DownloadSelected data from Apple's financial statements.xlsxDownload Selected data from Apple's financial statements.xlsx
4. You will also need the file called Apple Financial Analysis worksheet_Spring 2022.xlsxDownload Apple Financial Analysis worksheet_Spring 2022.xlsx
5. Read the following articles:
   • Apple's Growth Slows: https://www.nytimes.com/2022/04/28/business/apple-earnings.html?searchResultPosition=8(Links to an external site.)
   • How Technocrats Triumphed: https://www.nytimes.com/2022/05/01/technology/jony-ive-apple-design.html?searchResultPosition=5(Links to an external site.)
   • Farewell to the iPod: https://www.nytimes.com/2022/05/10/technology/apple-ipod-phasing-out.html?searchResultPosition=3(Links to an external site.)
   • Apple Showcase Unveils ......: https://www.nytimes.com/2022/03/08/technology/apple-iphone-ipad-event.html?searchResultPosition=3(Links to an external site.)
6. Find sources thatdescribe Apple's various lines of business.

• • The company's 10K report is one source you could use.
  • The company's About Us page is another valid source.
  • The site map at the bottom of the company webpage is also interesting.
  • Finance and investing websites can be used to find information about the company's products and services. Investing recommendations arenotuseful for this assignment.
  • Product reviews arenotuseful for this assignment.
  • If you are having trouble finding proper sources, contact one of the SPSCC librarians for help: https://library.spscc.edu/home(Links to an external site.)

Useful resources:

• Finding the 10K (Annual Report)
• https://www.apple.com/(Links to an external site.)
• Khan Academy: Percentages
• Selected data from Apple's financial statements.xlsxDownload Selected data from Apple's financial statements.xlsx
• Apple Financial Analysis worksheet_Spring 2022.xlsxDownload Apple Financial Analysis worksheet_Spring 2022.xlsx

Task:

Writing a five section essay which contains supporting charts.

1. Opening paragraph: The opening paragraph states the purpose of the essay.

2. Second paragraph: Provide a thorough description of the products and services that Apple Inc. offers.

3. Third section: Examine the income Apple earned from products and services from 2017 until the most recent fiscal year which ended September 2021.Provide data that shows:

• • The percent of net sales attributable to products and to services in 2017 and 2021.
  • The percent change in net product sales, net services sales, and total net sales from 2017 to 2021.
• This paragraph opens with a transition sentence that introduces the theme of the paragraph.
• Financial data is shown in a chart. A template for the chart can be found inApple Financial Analysis worksheet_Spring 2022.xlsxDownload Apple Financial Analysis worksheet_Spring 2022.xlsx
• The chart is followed by a discussion of the findings.

4. Fourth section: Evaluate Apple's financial condition at the end of fiscal years 2017 and 2021 using the following financial ratios:

• • Current ratio
  • Long-term debt as a percent of total assets
  • Debt ratio (Total liabilities as a percent of assets)
  • Net profit margin
• The paragraph opens with a transition sentence that introduces the theme of the paragraph.
• Financial data is shown in a chart. A template for the chart can be found inApple Financial Analysis worksheet_Spring 2022.xlsxDownload Apple Financial Analysis worksheet_Spring 2022.xlsx
• The chart is followed by a discussion of the findings.

5. Conclusion: This paragraph ties together the material in the previous sections.

• How has Apple's business model changed in the past five years?
• How do you think Apple's business model will change in the next 3 to 5 years? Give at least two specific examples.
  • Forward-looking statements should be based on logic and evidence.

6. At the end of the essay, include a list of Sources Cited.

This essay should be written in an analytical, informative tone. Language should be neutral and professional. Statements should be supported by evidence and research.

Before submitting your essay, be sure to check it against the grading rubric which you will find below. The rubric clearly describes the criteria I will be using to evaluate your work.

Note about file uploads:

Please make sure I can open your submission.

• I can open Word documents and pdfs.
• Icannotopen password protected documents (like Google Docs) or Mac files. Files that are submitted in that format will not be read.

Criteria:

The essay will be graded based on content and quality of the writing.

Be sure that you go back and read comments that have been left on your previous submissions. That feedback should be incorported into this submission.

A grading rubric is attached.

Rubric

Short Essay #5: Analyzing Apple's Financial Condition

Criteria

Ratings

Pts

This criterion is linked to a Learning OutcomeParagraph 1: Opening paragraph

2pts Full Marks The opening paragraph provides an introduction to the essay. If the reader did not know what the assignment was about, the opening paragraph would give them enough information to know what to expect in the following paragraphs.

1pts Minimally developed The opening paragraph mentions the topic of the essay. It may be lacking a transition sentence to introduce what comes next.

0pts No Marks The opening paragraph does not directly address the purpose of the essay.

2pts

This criterion is linked to a Learning OutcomeParagraph 2:Apple's products and services

8pts Full Marks The paragraph fully describes Apple's various lines of business. Both products and services are described. In addition, the paragraph discusses the various target markets that the company attempts to serve.

6pts Less depth The paragraph describes some of Apple's businesses. It has a good description of products and services. It does not adequately describe the different target markets that the company attempts to serve.

4pts Product focus only The paragraph describes Apple's tangible products. There is no description of the various services that Apple also offers.

2pts List with no discussion A list of products and/or services is provided. No context is provided.

0pts No Marks

8pts

This criterion is linked to a Learning OutcomeParagraph 3: Financial calculations

5pts Full Marks This section begins with an introductory sentence. All of the calculations are correct. The information is presented in the form of a chart or table. The following information is included: 1. What percent of net sales is attributable to products and services? 2. The percent change in net product sales, net services sales and total net sales

4pts One error One of two errors: 1. The section does not have an introductory sentence. 2. One of the calcuations is incorrect.

3pts Material is not presented in a table or chart All of the calculations are correct. However, because they are not presented in the form of a chart or table, it is difficult to see the financial relationships.

2pts Two errors Two of the calculations are incorrect.

0pts No Marks

5pts

This criterion is linked to a Learning OutcomeParagraph 3: Analysis of the financial calculations

5pts Full Marks The chart is followed by a discussion of the findings. The analysis has at least 6 substantive sentences.

3pts Less depth The chart is followed by a discussion of the findings. There are fewer than 6 substantive findings.

0pts No Marks

5pts

This criterion is linked to a Learning OutcomeParagraph 4: Financial calculations

5pts Full Marks The section begins with an introductory sentence. All of the calculations are correct. The information is presented in the form of a chart or table. The following information is included: 1. Current ratio 2. Long-term debt as a % 3. Debt ratio 4. Net profit margin

4pts No opening sentence Financial calculations are correct. However, this section does not open with an introductory sentence.

3pts Material is not presented in a table or chart All of the calculations are correct. However, because they are not presented in the form of a chart or table, it is difficult to see the financial relationships.

3pts One error One of the calculations is incorrect.

2pts Two errors Two of the calculations are incorrect.

1pts Three errors Three of the calculations are incorrect.

0pts No Marks

5pts

This criterion is linked to a Learning OutcomeParagraph 4: Analysis of the financial calculations

5pts Full Marks The chart is followed by a discussion of the findings. The analysis has at least 6 substantive sentences.

3pts Less depth The chart is followed by a discussion of the findings. There are fewer than 6 substantive findings.

0pts No Marks

5pts

This criterion is linked to a Learning OutcomeConcluding paragraph

6pts Full Marks The paragraph fully answers the following questions: 1. How has Apple's business model changed in the past five years? 2. How do you think Apple's business model will change in the next 3 to 5 years? Give at least two specific examples. Forward-looking statements should be based on logic and evidence. This paragraph will contain the author's opinion. However, it must still be written in a professional tone.

3pts Summary without a conclusion The paragraph repeats material from the preceding paragraphs.

1pts Inconsistent The conclusion is not consistent with the material presented in the body of the essay.

1pts Unrelated The conclusion is unrelated to the material presented earlier in the essay.

0pts No Marks

6pts

This criterion is linked to a Learning OutcomeSources cited

2pts Full Marks A list of sources cited is provided at the end of the essay.

0pts No Marks No sources are cited.

2pts

This criterion is linked to a Learning OutcomeQuality of the writing

2pts Full Marks The paper is written in an appropriate business tone. It has few to no grammar and spelling errors. The tone is objective, not persuasive.

1pts Grammar and spelling concerns The paper has spelling and grammatical errors.

0pts Tone: Inappropriate for business The analytical sections of the paper are not written in an objective tone. A clear point of view is being expressed.

-1pts Feedback The rubric does not allow a range of scores in this box. If feedback provided in previous written assignments has not been incorporated into this submission, the penalty will range from -1 to -5. A description will be provided in the comments box.

2pts