Refer to 2019 Annual Report (Form 10-K) of Apple Inc. provided and answer the following questions relating to Apple's Consolidated Statements of Cash Flows. Refer to the notes to financial statements for additional relevant information. (a) Determine whether net cash flow from operations is stable through time. (b) Did Apple's operating assets and liabilities increase or decrease between the year ended September 29, 2018, and the year ended September 28, 2019? By how much? What items contributed most to the change? (c) Compare net cash flow from operations to net income. Explain why they differ. (d) Suppose a friend of yours commented, "Apple must have poor financial management. It made a profit of $55,256 million in the year ended September 28, 2019, and it generated $69,391 million in cash from operations, yet it paid only $14,119 million in dividends. Its shareholders should expect more." Respond to your friend's comment. (e) Did Apple's net cash used by investing activities increase or decrease between the year ended September 29, 2018, and the year ended September 28, 2019? By how much? What were the major causes of the change? (f) What were the primary uses of cash by investing activities in the year ended September 28, 2019? (g) Did Apples net cash used by financing activities increase or decrease between the year ended September 29, 2018, and the year ended September 28, 2019? By how much? What were the major causes of the change? (h) What were the primary providers of cash or uses of cash by financing activities in the year ended September 28, 2019? (i) Relate net cash flow from operations to investing and dividend payment needs in the year ended September 28, 2019. Locate Management's Discussion and Analysis. Look under the section titled Liquidity and Capital Resources. What does management have to say? What are your comments? Item 6. Selected Financial Data The information set forth below for the five years ended September 28, 2019, is not necessarily indicative of results of future operations, and should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes thereto included in Part II, Item 8 of this Form 10-K to fully understand factors that may affect the comparability of the information presented below in millions, except number of shares, which are reflected in thousands, and per share amounts). $ Total net sales Net income 2019 260,174 55,256 $ $ 2018 265,595 59,531 $ $ 2017 229,234 48,351 $ $ 2016 215,639 45,687 $ $ 2015 233,715 53,394 Earnings per share: Basic Diluted $ 11.97 11.89 $ $ 12.01 $ 11.91 $ 9.27 9.21 $ $ 8.35 8.31 $ $ 9.28 9.22 Cash dividends declared per share $ 3.00 $ 2.72 $ 2.40 $ 2.18 $ 1.98 Shares used in computing earnings per share: Basic Diluted 4,617,834 4,648,913 4,955,377 5,000,109 5,217,242 5,251,692 ,242 5,470,820 5,500,281 5,753,421 5,793,069 $ A Total cash, cash equivalents and marketable securities Total assets Non-current portion of term debt Other non-current liabilities 205,898 338,516 91,807 50,503 $ $ $ $ 237,100 365,725 93,735 48,914 $ $ $ $ 268,895 375,319 97,207 44,212 $ $ $ $ 237,585 321,686 75,427 39,986 $ $ $ $ 205,666 290,345 53,329 38,104 $ A Apple Inc. | 2019 Form 10-K 17 Gross Margin Products and Services gross margin and gross margin percentage for 2019, 2018 and 2017 were as follows (dollars in millions): 2019 2018 2017 $ $ A Gross margin: Products Services Total gross margin 68,887 29,505 98,392 77,683 24,156 101,839 70,197 17.989 | $ $ 88,186 Gross margin percentage: Products Services Total gross margin percentage 32.2% 63.7% 37.8% 34.4% 60.8% 38.3% 35.7% 55.0% 38.5% 2019 Change 2018 Change 2017 $ 4% $ $ (3)% Net sales by reportable segment: Americas Europe Greater China Japan Rest of Asia Pacific Total net sales 116,914 60,288 43,678 21,506 17,788 260, 174 (16)% (1)% 2% (2)% 112,093 62,420 51,942 21,733 17,407 265,595 16% 14% 16% 23% 15% 16% 96,600 54,938 44,764 17,733 15,199 229,234 $ $ Americas Refer to 2019 Annual Report (Form 10-K) of Apple Inc. provided and answer the following questions relating to Apple's Consolidated Statements of Cash Flows. Refer to the notes to financial statements for additional relevant information. (a) Determine whether net cash flow from operations is stable through time. (b) Did Apple's operating assets and liabilities increase or decrease between the year ended September 29, 2018, and the year ended September 28, 2019? By how much? What items contributed most to the change? (c) Compare net cash flow from operations to net income. Explain why they differ. (d) Suppose a friend of yours commented, "Apple must have poor financial management. It made a profit of $55,256 million in the year ended September 28, 2019, and it generated $69,391 million in cash from operations, yet it paid only $14,119 million in dividends. Its shareholders should expect more." Respond to your friend's comment. (e) Did Apple's net cash used by investing activities increase or decrease between the year ended September 29, 2018, and the year ended September 28, 2019? By how much? What were the major causes of the change? (f) What were the primary uses of cash by investing activities in the year ended September 28, 2019? (g) Did Apples net cash used by financing activities increase or decrease between the year ended September 29, 2018, and the year ended September 28, 2019? By how much? What were the major causes of the change? (h) What were the primary providers of cash or uses of cash by financing activities in the year ended September 28, 2019? (i) Relate net cash flow from operations to investing and dividend payment needs in the year ended September 28, 2019. Locate Management's Discussion and Analysis. Look under the section titled Liquidity and Capital Resources. What does management have to say? What are your comments? Item 6. Selected Financial Data The information set forth below for the five years ended September 28, 2019, is not necessarily indicative of results of future operations, and should be read in conjunction with Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and accompanying notes thereto included in Part II, Item 8 of this Form 10-K to fully understand factors that may affect the comparability of the information presented below in millions, except number of shares, which are reflected in thousands, and per share amounts). $ Total net sales Net income 2019 260,174 55,256 $ $ 2018 265,595 59,531 $ $ 2017 229,234 48,351 $ $ 2016 215,639 45,687 $ $ 2015 233,715 53,394 Earnings per share: Basic Diluted $ 11.97 11.89 $ $ 12.01 $ 11.91 $ 9.27 9.21 $ $ 8.35 8.31 $ $ 9.28 9.22 Cash dividends declared per share $ 3.00 $ 2.72 $ 2.40 $ 2.18 $ 1.98 Shares used in computing earnings per share: Basic Diluted 4,617,834 4,648,913 4,955,377 5,000,109 5,217,242 5,251,692 ,242 5,470,820 5,500,281 5,753,421 5,793,069 $ A Total cash, cash equivalents and marketable securities Total assets Non-current portion of term debt Other non-current liabilities 205,898 338,516 91,807 50,503 $ $ $ $ 237,100 365,725 93,735 48,914 $ $ $ $ 268,895 375,319 97,207 44,212 $ $ $ $ 237,585 321,686 75,427 39,986 $ $ $ $ 205,666 290,345 53,329 38,104 $ A Apple Inc. | 2019 Form 10-K 17 Gross Margin Products and Services gross margin and gross margin percentage for 2019, 2018 and 2017 were as follows (dollars in millions): 2019 2018 2017 $ $ A Gross margin: Products Services Total gross margin 68,887 29,505 98,392 77,683 24,156 101,839 70,197 17.989 | $ $ 88,186 Gross margin percentage: Products Services Total gross margin percentage 32.2% 63.7% 37.8% 34.4% 60.8% 38.3% 35.7% 55.0% 38.5% 2019 Change 2018 Change 2017 $ 4% $ $ (3)% Net sales by reportable segment: Americas Europe Greater China Japan Rest of Asia Pacific Total net sales 116,914 60,288 43,678 21,506 17,788 260, 174 (16)% (1)% 2% (2)% 112,093 62,420 51,942 21,733 17,407 265,595 16% 14% 16% 23% 15% 16% 96,600 54,938 44,764 17,733 15,199 229,234 $ $ Americas