Use Apple's financial statements in Appendix A to answer the following. Required: 1. Using fiscal 2017 as the base year, compute trend percents for fiscal years 2017,2018 , and 2019 for total net sales, total cost of sales, operating income, other income (expense) net, provision for income taxes, and net income. 2. Compute common-size percents for fiscal years 2018 and 2019 for the following categories of assets: (a) total current assets; (b) property, plant and equipment, net; and (c) accounts receivable, net. 3. Using current assets as a percent of total assets to measure liquidity, did Apple's asset makeup become more liquid or less liquid in 2019? Apple Inc. CONSOI INA TFE RAI A NCF SHFFTS See accompanying Notes to Consolidated Financial Statements. See accompanying Notes to Consolidated Financial Statements. APPLE INC. SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Basis of Presentation and Preparation In the opinion of the Company's management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The preparation of these consolidated financial statements and accompanying notes in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported. The Company's fiscal year is the 52- or 53-week period that ends on the last Saturday of September. The Company's fiscal years 2019 and 2018 spanned 52 weeks each, whereas fiscal year 2017 included 53 weeks. A 14th week was included in the first fiscal quarter of 2017, as is done every five or six years, to realign the Company's fiscal quarters with calendar quarters. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company's fiscal years ended in September and the associated quarters, months and periods of those fiscal years. Revenue Recognition Net sales consist of revenue from the sale of iPhone, Mac, iPad, Services and other products. The Company recognizes revenue at the amount to which it expects to be entitled when control of the products or services is transferred to its customers. Control is generally transferred when the Company has a present right to payment and title and the significant risks and rewards of ownership of products or services are transferred to its customers. For most of the Company's Products net sales, control transfers when products are shipped. For the Company's Services net sales, control transfers over time as services are delivered. Payment for Products and Services net sales is collected within a short period following transfer of control or commencement of delivery of services, as applicable. The Company records reductions to Products net sales related to future product returns, price protection and other customer incentive programs based on the Company's expectations and historical experience. For arrangements with multiple performance obligations, which represent promises within an arrangement that are capable of being distinct, the Company allocates revenue to all distinct performance obligations based on their relative stand-alone selling prices ("SSPs"). When available, the Company uses observable prices to determine SSPs. When observable prices are not available, SSPs are established that reflect the Company's best estimates of what the selling prices of the performance obligations would be if they were sold regularly on a stand-alone basis. The Company has identified up to three performance obligations regularly included in arrangements involving the sale of iPhone, Mac, iPad and certain other products. The first performance obligation, which represents the substantial portion of the allocated sales price, is the hardware and bundled software delivered at the time of sale. The second performance obligation is the right to receive certain product-related bundled services, which include iCloud, Siri and Maps. The third performance obligation is the right to receive, on a when-and-if-available basis, future unspecified software upgrades relating to the software bundled with each device. The Company allocates revenue and any related discounts to these performance obligations based on their relative SSPs. Because the Company lacks observable prices for the undelivered performance obligations, the allocation of revenue is based on the Company's estimated SSPs. Revenue allocated to the delivered hardware and bundled software is recognized when control has transferred to the customer, which generally occurs when the product is shipped. Revenue allocated to the product-related bundled services and unspecified software upgrade rights is deferred and recognized on a straight-line basis over the estimated period they are expected to be provided. Cost of sales related to delivered hardware and bundled software, including estimated warranty costs, are recognized at the time of sale. Costs incurred to provide product-related bundled services and unspecified software upgrade rights are recognized as cost of sales as incurred. For the sale of third-party products where the Company obtains control of the product before transferring it to the customer, the Company recognizes revenue based on the gross amount billed to customers. The Company considers multiple factors when determining whether it obtains control of third-party products including, but not limited to, evaluating if it can establish the price of the product, retains inventory risk for tangible products or has the responsibility for ensuring acceptability of the product. For thirdparty applications sold through the App Store, Mac App Store, TV App Store and Watch App Store and certain digital content sold through the Company's other digital content stores, the Company does not obtain control of the product before transferring it to the customer. Therefore, the Company accounts for such sales on a net basis by recognizing in Services net sales only the commission it retains. The Company has elected to record revenue net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded within other current liabilities until remitted to the relevant government authority. Deferred Revenue As of September 28, 2019 and September 29, 2018, the Company had total deferred revenue of $8.1 billion and $8.8 billion, respectively. As of September 28,2019 , the Company expects 68% of total deferred revenue to be realized in less than a year, 25% within one-to-two years, 6% within two-to-three years and 1% in greater than three years. Advertising Costs Advertising costs are expensed as incurred and included in selling, general and administrative expenses. Apple Inc. Notes-continued Other Income and Fxnense Cash Equivalents and Marketable Securities All highly liquid investments with maturities of three months or less at the date of purchase are classified as cash equivalents. The Company's investments in marketable debt securities have been classified and accounted for as available-for-sale. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument's underlying contractual maturity date. Unrealized gains and losses on marketable debt securities classified as available-for-sale are recognized in other comprehensive income/(loss) ("OCI"). The Company's investments in marketable equity securities are classified based on the nature of the securities and their availability for use in current operations. The Company's marketable equity securities are measured at fair value with gains and losses recognized in other income/(expense), net ("OI\&E"). The cost of securities sold is determined using the specific identification method. Restricted Cash and Restricted Marketable Securities The Company considers cash and marketable securities to be restricted when withdrawal or general use is legally restricted. The Company records restricted cash as other assets in the Consolidated Balance Sheets, and determines current or non-current classification based on the expected duration of the restriction. The Company records restricted marketable securities as current or non-current marketable securities in the Consolidated Balance Sheets based on the classification of the underlying securities. The Company's restricted cash primarily consisted of cash required to be on deposit under a contractual agreement with a bank to support the Company's iPhone Upgrade Program. Accounts Receivable (Trade Receivables) The Company has considerable trade receivables outstanding with its third-party cellular network carriers, wholesalers, retailers, resellers, small and mid-sized businesses and education, enterprise and government customers. As of September 28, 2019, the Company had no customers that individually represented 10% or more of total trade receivables. As of September 29, 2018, the Company had one customer that represented 10% or more of total trade receivables, which accounted for 10%. The Company's cellular network carriers accounted for 51% and 59% of total trade receivables as of September 28, 2019 and September 29, 2018 , respectively. Inventories Inventories are measured using the first-in, first-out method. Property, Plant and Equipment Depreciation on property, plant and equipment is recognized on a straight-line basis over the estimated useful lives of the assets, which for buildings is the lesser of 30 years or the remaining life of the underlying building; between one and five years for machinery and equipment, including product tooling and manufacturing process equipment; and the shorter of lease term or useful life for leasehold improvements. Capitalized costs related to internal-use software are amortized on a straight-line basis over the estimated useful lives of the assets, which range from three to five years. Depreciation and amortization expense on property and equipment was $11.3 billion, $9.3 billion and $8.2 billion during 2019, 2018 and 2017, respectively. Fair Value Measurements The fair values of the Company's money market funds and certain marketable equity securities are based on quoted prices in active markets for identical assets. The valuation techniques used to measure the fair value of the Company's debt instruments and all other financial instruments, which generally have counterparties with high credit ratings, are based on quoted market prices or model-driven valuations using significant inputs derived from or corroborated by observable market data. Financial Instruments The Company typically invests in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. The Company's investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer. Fair values were determined for each individual security in the investment portfolio. Accrued Warranty and Guarantees The following table shows changes in the Company's accrued warranties and related costs for 2019 and 2018: Apple Inc. Notes-continued Other Non-Current Iiabilities Term Debt As of September 28, 2019, the Company had outstanding floating- and fixed-rate notes with varying maturities for an aggregate principal amount of $101.7 billion (collectively the "Notes"). The Notes are senior unsecured obligations and interest is payable in arrears. The Company recognized $3.2 billion, $3.0 billion and $2.2 billion of interest cost on its term debt for 2019,2018 and 2017 , respectively. The future principal payments for the Company's Notes as of September 28, 2019 are as follows (in millions): As of September 28, 2019 and September 29, 2018, the fair value of the Company's Notes, based on Level 2 inputs, was $107.5 billion and $103.2 billion, respectively. Share Repurchase Program On April 30, 2019, the Company announced the Board of Directors increased the current share repurchase program authorization from $100 billion to $175 billion of the Company's common stock, of which $96.1 billion had been utilized as of September 28, 2019. During 2019, the Company repurchased 345.2 million shares of its common stock for $67.1 billion, including 62.0 million shares delivered under a $12.0 billion accelerated share repurchase arrangement dated February 2019, which settled in August 2019. The Company's share repurchase program does not obligate it to acquire any specific number of shares. Contingencies The Company is subject to various legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully resolved. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management's expectations, the Company's financial condition and operating results for that reporting period could be materially adversely affected. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss, or a material loss greater than a recorded accrual, concerning loss contingencies for asserted legal and other claims, except for the following matters: - VirnetX - Qualcomm - iOS Performance Management Cases - French Competition Authority Disaggregated Revenue by Significant Products and Services A reconciliation of the Company's segment operating income to the Consolidated Statements of Operations for 2019, 2018 and 2017 is as follows: Apple Inc. Notes-continued Selected Financial Data (in millions, except number of shares, which are reflected in thousands, and per share amounts). Company Background The Company designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services. The Company's fiscal year is the 52- or 53-week period that ends on the last Saturday of September. The Company is a California corporation established in 1977. Products iPhone iPhone (1) is the Company's line of smartphones based on its iOS operating system. In September 2019, the Company introduced three new iPhones: iPhone 11, iPhone 11 Pro and iPhone 11 Pro Max. Mac Mac (1) is the Company's line of personal computers based on its macOS operating system. During 2019, the Company released a new version of MacBook Air(1) and a new Mac mini , and introduced an updated Mac Pro , which is expected to be available in the fall of 2019. iPad iPad is the Company's line of multi-purpose tablets. iPad is based on the Company's iPadOS TM operating system, which was introduced during 2019. Also during 2019, the Company released two new versions of iPad Pro , an iPad Air, an updated iPad mini and a new 10.2-inch iPad. Wearables, Home and Accessories Wearables, Home and Accessories includes AirPods , Apple TV , Apple Watch , Beats products, HomePod TM, iPod touch and other Apple-branded and third-party accessories. AirPods are the Company's wireless headphones that interact with Siri. In October 2019, the Company introduced AirPods Pro TM. Apple Watch is a personal electronic device that combines the watchOS user interface and other technologies created specifically for a smaller device. In September 2019, the Company introduced Apple Watch Series 5. Services Digital Content Stores and Streaming Services The Company operates various platforms that allow customers to discover and download applications and digital content, such as books, music, video, games and podcasts. These platforms include the App Store , available for iPhone and iPad, the Mac App Store, the TV App Store and the Watch App Store. The Company also offers subscription-based digital content streaming services, including Apple Music , which offers users a curated listening experience with on-demand radio stations, and Apple TV+, which offers exclusive original content, and is expected to be available in November 2019. AppleCare AppleCare includes AppleCare+ ("AC+") and the AppleCare Protection Plan, which are fee-based services that extend the coverage of phone support eligibility and hardware repairs. AC+ offers additional coverage for instances of accidental damage and is available in certain countries for certain products. Additionally, AC+ with theft and loss protection is available for iPhone in the U.S. iCloud iCloud (1) is the Company's cloud service, which stores music, photos, contacts, calendars, mail, documents and more, keeping them up-to-date and available across multiple Apple devices and Windows personal computers. Licensing The Company licenses the use of certain of its intellectual property, and provides other related services. Other Services The Company delivers a variety of other services available in certain countries, including Apple Arcade TM, a game subscription service; Apple Card TM, a co-branded credit card; Apple News+, a subscription news and magazine service; and Apple Pay, a cashless payment service. Markets and Distribution The Company's customers are primarily in the consumer, small and mid-sized business, education, enterprise and government markets. The Company sells its products and resells third-party products in most of its major markets directly to consumers, small and mid-sized businesses, and education, enterprise and government customers through its retail and online stores and its direct sales force. The Company also employs a variety of indirect distribution channels, such as third-party cellular network carriers, wholesalers, retailers and resellers. During 2019, the Company's net sales through its direct and indirect distribution channels accounted for 31% and 69%, respectively, of total net sales. Employees As of September 28, 2019, the Company had approximately 137,000 full-time equivalent employees. Using fiscal 2017 as the base year, compute trend percents for fiscal years 2017, 2018, and 2019 for total net sales, total cost of sales, operating income, other income (expense) net, provision for income taxes, and net income. Note: Input all the values as positive numbers. Enter your answers in millions. Round your percentage answers to 1 decimal place. Compute common-size percents for fiscal years 2018 and 2019 for the following categories of assets: (a) total current assets; (b) property, plant and equipment, net; and (c) accounts receivable, net. Note: Enter your answers in millions. Round your percentage answers to 1 decimal place. Using current assets as a percent of total assets to measure liquidity, did Apple's asset makeup become more liquid or less liquid in 2019