The ratio of costs to revenues can indicate opportunities for activity-based costing to increase efficiency and reduce costs. Refer to Apple's and Google's 2017 income statements in Arpendix A to answer the following Required: 1. For Apple, compute the ratio of costs (titled as cost of sales plus operating expenses) to net sales for 2017. 2. For Google, compute the ratio of costs (titled as total costs and expenses) to revenues for 2017. 3. Which company has the higher ratio of costs to revenues for 2017? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 For Apple, compute the ratio of costs (titled as cost of sales plus operating expenses) to net sales for 2017. (Round your answer to three decimal places.) Ratio of costs to revenues Apple 73.240 Required 2 > September 26, 2015 $ 233,715 140,089 93,626 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, 2017 September 24, 2016 Net les $ 229,234 $ 215,639 Cost of sales 141,048 131,376 Gross margin 88,186 84,263 Operating expenses Research and development 11,581 10,045 Selling, general and administrative 15,261 14,194 Total operating expenses 26,842 24,239 Operating income 61,344 60.024 Other income (expense), net 2,745 1,348 Income before provision for income taxes 64,089 61,372 Provision for income taxes 15,738 15,685 Net income 48 351 45,687 8,067 14,329 22,396 71,230 1,285 72,515 19.121 53,394 $ 9.27 9.21 8.35 8.31 $ $ $ $ 9.28 9.22 Earnings per share: Basic Diluted Shares used in computing earnings per share: Basic Diluted Cash dividends declared per share 5.217.242 5.251,692 2.40 5,470,820 5,500,281 2.18 5,753,421 5,793,069 1.98 $ $ $ See accompanying Notes to Consolidated Financial Statements. $ Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 30, 2017 September 24, 2016 September 26, 2015 Net income 48,351 S 45.687 S 53,394 Other comprehensive income (loss): Change in foreign currency translation, net of tax effects of S(77). 58 and 5201, respectively 224 75 (411) Change in unrealized gains/losses on derivative Instruments Change in fair value of derivatives, nct of tax benefit (expense) of $(478), 5(7) and (441), respectively 1.315 7. 2,905 Adjustment for net(gains) losses realized and included in net income net of tax expense (hencfit) of $475, 5131 and 5630, respectively (1.477) (741) (3.497) Total change in unrealized gains/losses on derivative instruments, net of tax (102) (734) (592) Change in unrealized gains/losses on marketable securities Change in fair value of marketable securities, net of tax benefit (expense) of 5425, 5(863) and 5264, respectively (782) 1.52 (483) Adjustment for het (gains) losses realized and included in net income net of tax expense (benefit of $35.5631), and S(32), respectively (6-1) 56 59 Total change in untealized pains/losses on marketable securities, Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of sharcs which are reflected in thousands) Accumulated Other Common Stock and Comprehensive Total Additional Paid-In Capital Retained Income Shareholders Shares Amount Earnings (Loss) Equity Balances as of September 27, 2014 5,866,161 $ 23,313 $ 87,152 $ 1,082 $ 111,547 Net income 53,394 53,394 Other comprehensive income (loss) (1,427) (1,427) Dividends and dividend equivalents declared (11,627) (11,627) Repurchase of common stock (325,032) (36,026) (36,026) Share-based compensation 3,586 3,586 Common stock issued, net of shares withheld for employee taxes 37.624 (231) (609) (840) Tax benefit from equity awards, including transfer pricing adjustments 748 748 Balances as of September 26, 2015 5,578,753 $ 27,416 5 92,284 $ (345) S 119,355 Net income 45.687 45,687 Other comprehensive income (loss) 979 979 Dividends and dividend equivalents declared (12,188) (12,188) Repurchase of common stock (279,609) (29,000) (29,000) Share-based compensation 4.262 4,262 Common stock issued, net of shares withheld for employee taxes 37,022 (806) (419) (1,225) Tax benefit from equity awards, including transfer pricing adjustments 379 379 Balances as of September 24, 2016 5,336,166 S 31.251s 96,364 $ 634 $ 128,249 Net income 48,351 48,351 Other comprehensive income (loss) (784) (784) Dividends and dividend equivalents declared (12.803) (12,803) Repurchase of common stock (246,496) (33,001) (33,001) Share-based compensation 4.909 4,909 Common stock issued, net of shares withheld for employee taxes 36,531 (913) (581) (1,494) Tax benefit from equity awards, including transfer pricing adjustments 620 620 Balances as of September 30, 2017 5.126,201 5 35,867 98 310 $ (150) S 134,017 See accompanying Notes to Consolidated Financial Statements 11 11 CONSOLIDATED STATEMENTS OF INCOME (In millions) 2015 74,989 2016 90.272 2017 110.855 $ $ s Year Ended December 31 Revenues Costs and expenses Cost of revo Research and development Sales and marketing General and administrative European Commission fine Total costs and expenses Income from operations Other income (expense), net Income before income taxes Provision for income taxes Net income Less: Adjustment Payment to Class C capital stockholders Net income ilable to all stockholders 28,164 12.282 9.047 6,136 0 55,629 19,360 291 19,651 3,303 16,348 522 15.826 35,138 13,948 10,485 6,985 0 66,356 23,716 434 24.150 4,672 19,478 45,583 16,625 12.893 6,872 2.736 84,709 26,146 1.047 27,193 14531 12662 $ 19.478 s 12,662 "Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its global familiarity and that Google provides 99% of Alphabet's 5110,855 billion in revenues. See accompanying notes GOOGLE 2016 19.478 2017 12.662 5 (599) 1,543 Google Inc. (Alphabet Inc.)" CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Year Ended December 31 2015 Net income 16,348 $ Other comprehensive income (loss): Change in foreign currency translation adjustment (1.067) Available for sale investments: Change in net unrealized gains (losses) (715) Les reclassification adjustment for net (gains) losses included in net income 205 Net change (net of tax effect of $29, 50, and $0) (507 Cash flow hedges: Change in net unrealized gains (losses) 676 Less: reclassification adjustment for net (gains) losses included in net income (1.003) Net change (net of tax effect of S115, 564, and S247) Other comprehensive income (loss) 61.901 Comprehensive income (314 307 105 412 (93) SIS (351) 164 (528) 18,950 1545 1.410 14.072 Google is part of Alphabet, but we loosely refer to Alphabet as "Google" because of its global familiarity and that Google provides 99% of Alphabet's $110.855 billion in revenues See accompanying notes