Success will be tied to your understanding of how to read and interpret the 10K, annual reports and financial statements. 1. Clearly describe the company and the industry the company is a part of. a. Is the industry or market growing or shrinking (Provide a clear explanation and provide research to defend your answer). 2. Looking at the most recent annual report, is the company financed primarily by debt or equity? (Provide a clear explanation and defend your answer) a. Is there a benefit to financing with debt or equity, is than an advantage using one or the other? b. Is the company paying off debt or adding debt? 3. What is the largest current asset on the most recent annual report? a. Why do you think the company maintains such a large balance? (Provide a clear explanation and defend your answer). 4. Compute the company Free Cash Flow Yon the most recent annual report (show your computations) a. Interpret the computation, what does the free cash flow tell you about the company? (Provide a clear explanation) b. Does the company appear may have to invest in replacing out dated assets in the near future? 5. What is P/E ratio for the companies? What does the P/E ratios say about the valuation of the companies. Why is one of the companies P/E ratio higher. Consider the revenue growth as the main driver of P/E ratio. (Provide a clear explanation of how you evaluated the P/E ratio in your recommendation. 6. Summarize your evaluation of liquidity, asset tumover, solvency, and profitability by performing a through horizontal analysis. See accompanying Notes to Condensod Consolidated Financial Statements. Applo inc. I Q2 2023 Form 10-Q 12 Apple lnc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in milions, except number of shares which are reflected in thousands and par value) LIABILITIES AND SHAFEHOLDEAS' EQUITY: Current liabilities: on-current liabilities: Commitments and contingencies Shareholders' equity; 3mmon stock and additional paidin capital, $0.00001 par value: 50,400,000 shares authorized; 15,723,406 and 15,943,425 shares issued and outstanding. respectively Retained earnings/(Aocumulatod defici) Accumulated other comprehensive income/(loss) 69,568 4.336 (11.746) 64,849 (3.068) (11.109) Apple inc. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDEAS' EQUITY (UnaUdited) (In millions, except per share amounts) Apple lnc. CONDENSED CONSOUDATED STATEMENTS OF CASH FLOWS (UnaUdited) (lh millions) Other current and non-current liablities Cash generated by operating activities \begin{tabular}{rr} 1,757 & 2,515 \\ \hline 62,565 & 75,132 \\ \hline \end{tabular} Investing activitios: Purchases of marketable securities Financing activities Payments for taxes related to net share settiement of equily awards Payments for dividends and dividend equivalents Repurchases of common stock Repayments of term debt Proceeds tromv(Repayments of) commercial paper, net Other Cash used in financing activites Increase(Decrease) in cash, cash equivalents and restricted cash Cash, cash equivalents and restricted cash, onding balances Supplemental cash tiow disciosure: Apple lne. Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1 - Summary of Signiticant Accounting Policies Basis of Presentation and Preparation The condensed consolidated financial stalements include the accounts of Apple inc: and its wholly owned subsidiaries (collectively "Apple" or the "Company"). Intercompany accovints and transactions have been eliminated. In the opinion. of the Company's management, the condensed consolidated financial stalements reflect all adjustments, which are normal and recurrine in nature, necessary for tair financial statement presentation. The preparation of these condensed consolidated financial statements and acoompanying noles in conformity with US. generally accepted accounting princlples requires management to make estimates and assumptions that aflect the amounts reported. Actual resulis could differ materially frem those estimates. Certain prior period amounts in the condensed consolidated Enancial statements and accompafying notes have been reclassilied to conform to the current period's presentation. These condensed consolidated tinancial statements and aocompanying notes should be read in conjunction with the Company's annual consolidated financial statements and acoompanying notes included in its Annual Report on Form 10. K for the fiscal year ended September 24,2022 . The Company's fiscal yoar is the 52- or 53-week period that ends on the last Saturday of September. An addfional week is included in the first fiscal quarter every five or six years to realign the Company's fiscal quarters with calendar quarters. which occurred in the first fiscal quarter of 2023 . The Company's fiscal years 2023 and 2022 span 53 and 52 weeks, respectively. Uniess otherwise stated, relerences to particular years, quarters, months and periods refor to the Compary's fiscal years ended in September and the associated quarters, months and periods of those fiscal years Earnings Per Share The following table shows the computation of basic and diluled earnings per share for the thvee- and six-month periods Earning Per Sthare The following table shows the computabion of basic and diluled eamings per share for the three- and six-month periods ended April 1, 2023 and March 26, 2022 (net income in milions and shares in thousands): Approximately 48 million restricted stock units ("PSUs") were excluded from the computation of dluted earnings per share for the six months ended April 1, 2023 becouse their eHect would have been antidilutive. Apple lne. I 022023 Foem 10Q16 Note 2 - Pevenue Net sales disaggregated by significant products and services for the three- and six-month periods ended April 1.2023 and March 26, 2022 were as follows (in millions)