Use the table below and Apple's financial statements in Appendix A to answer the following. $ millions Interest expense 2018 $ 2017 $ 2016 3,240 2,323 $1,456 1. Compute times interest earned for each of the three years shown. 2. Is Apple in a good or bad position to pay interest obligations? Assume an industry average of 10. Complete this question by entering your answers in the tabs below. Required Required 1 Is Apple in a good or bad position to pay interest obligations? Assume an industry average of 10. Is Apple in a good or bad position? A-2 Appendix A Financial Statement Information Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) Current assets Cash and cash equivalents Marketable securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assets Total current assets Non-current asse Marketable securities Property, plant and equipment, net Other non-current assets Tinal assets Total non-current assets ASSETS September 29, 2018 September 30, 2017 $ 25,913 $ 20,289 40,388 53,892 23,186 17,874 3,956 4,855 25.809 17,799 12.087 13,936 131,339 128,645 170,799 194,714 41,304 33,783 22,283 18,177 234,386 246,674 365,725 375,319 Current liabilities Accounts payable Other current liabilities Deferred revenue Commercial paper Term dele Total current liabilities Non-current liabilities Deferred revenue Term debe Other non-current liabilities Total non-current liabilities Total liabilities LIABILITIES AND SHAREHOLDERS' EQUITY 55.888 $ 44,242 32,687 30,551 7,543 7,548 11,964 11,977 8,784 6,496 116,866 100,814 2,797 2,836 93,735 97,207 45,180 40,415 141,712 140,458 258,578 241,272 Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 4,754,986 and 5,126,201 shares issued and outstanding, respectively 40,201 35,867 Retained earnings 70,400 98,330 Accumulated other comprehensive income (loss) (3,454) (150) Total shareholders' equity 107,147 134,047 Total liabilities and shareholders' equity 365,725 375,319 See accompanying Notes to Consolidated Financial Statements Appendix A Financial Statement Information A-3 Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended Net sales Cost of sales Gross margin September 29, 2018 265,595 163,756 101,839 September 30, 2017 229.234 141,048 88,186 September 24, 2016 215,639 131,376 84,263 Operating expenses Research and development 14,236 11,581 10,045 Selling, general and administrative 16.705 15.261 14,194 Total operating expenses 30,941 26.842 24,239 Operating income 70,898 61,344 60,004 Other income (expense), net 2.005 2.745 1,348 Income before provision for income taxes 72.903 64,089 61,372 Provision for income taxes 13,372 15,738 Net income 59.531 48.351 15,685 45,687 Earnings per share: Basic Diluted Shares used in computing earnings per share Basic Diluted 12:01 9.27 8.35 11.91 $ 9.21 8.31 4,955,377 5,000 109 5,217.242 5,470.820 5,251,692 5,500,281 See accompanying Notes to Consolidated Financial Statements Years ended Net income Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) September 29, 2018 59.531 September 30, 2017 September 24, 2016 5 48,351 45,687 Other comprehensive income(loss) Change in foreign currency translation, net of tax effects of $(1), $(77) and $8, respectively (525) 224 75 Change in unrealized gains/losses on derivative instruments Change in fair value of derivatives, net of tax benefit (expense) of $(149), $(478) and S(3), respectively 523 1,315 7 Adjustment for net (gains) losses realized and included in not income. net of tax expense (benefit) of S(104), $475 and $131, respectively Total change in unrealized gains/losses on derivative instruments, net of tax 382 (1477) (741) 905 (162) (734) Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $1,156, 5425 and 5(863), respectively (3,407) (782) 1,582 Adjustment for net (gains) losses realized and included in net income. net of tax expense (benefit of $21, $35 and $(31), respectively (64) 56 Total change in unrealized gains/losses on marketable securities, net of tax (3,406) (846) 1,638 Total other comprehensive income (loss) (3.026) (384) 979 Total comprehensive income 56.505 47,567 46,666 See accompanying Notes to Consolidated Financial Statements APPLE A-4 Appendix A Financial Statement Information Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in millions, except number of shares which are reflected in thousands) Balances as of September 26, 2015 Net income Other comprehensive income (loss) Dividends and divided equivalent declared at $2.18 per share or RSU Repurchase of common stock Common Stock and Additional Paid-In Capital Shares 5.578,753 Accumulated Other Comprehensive Income (Loss) Retained Amount Earnings 27,416 5 92,284 $ 45,667 Total Shareholders 979 Equity (345) $1 119.355 45.6K 979 (279,609) (12.188) (29,000) Share-based compensation 4262 (12.188) (29,000 4262 Common stock issued, net of shares withheld for employee taxes 37,022 (106) (419) (1225) Tax benefit from equity awards, including trade pricing adjustments 379 379 Balances as of September 24, 2016 5,336,166 31251 96,364 634 128,249 Net income 48351 48351 Other comprehensive income (loss) (784) (784) Dividends and dividend equivalent declared at $2.40 per share or RSU (12.803) (12,803) Repurchase of common stock (246,496) (33.001) (33.001) Share-based compensation 4,509 4.909 Common stock issued, net of shares withheld for employee taxes 36,531 (913) (581) (1,494) Tax benefit from equity awards, including trader pricing adjustments 620 Balances as of September 30, 2017 5.126,201 15,167 98,330 (150) 134047 Dividends and dividend equivalents Cumulative effect of change in Net income Other congerbensive income (less) declared at $2.72 per share or F or KSU Repurchase of common stock Share-based compensation Common mocked.net of shares withheld for employee taxes Balances as of September 29, 2018 See accompanying Notes to Consolidand Financial Statements 278 (278) 59.531 59,531 3,026) <3,026) (405,549) (13,735) (73,056) (13,735) (73056) 5,443 5443 M34 4.751.986 (1.109) 1948) (2057) 20.400 0.454) 107.147 Appendix A Financial Statement Information A-5 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS Years ended Cash and cash equivalents, beginning of the year Operating activities Net income Adjustments to reconcile net income to cash generated by operating activities Depreciation and amortization (in millions) September 29, 2018 September 30, 2017 September 24, 2016 20.289 20,484 21,120 59,531 48,351 45,687 10,903 10,157 10,505 Share-based compensation expesse 5,340 4,840 4,210 Deferred income tax expense (benefit) (32,590) 5,966 4,938 Other (444) (166) 486 Changes in operating assets and liabilities: Accounts receivable, net (5.322) (2,093) 527 Inventories 828 (2,723) 217 Vendor non-trade receivables (8,010) (4,254) (51) Other current and non-current assets (423) (5,318) 1,055 Accounts payable 9,135 8,966 2,157 Deferred revenue (44) (626) (1,554) Other current and non-current liabilities 38,490 1,125 (1,906) Cash generated by operating activities Investing activities Purchases of marketable securities 77,434 64,225 66,231 (71,356) (159,486) (142.428) Proceeds from maturities of marketable securities 55,881 31,775 21,258 Proceeds from sales of marketable securities 47,838 94,564 90,536 Payments for acquisition of property, plant and equipment (13,313) (12,451) (12,734) Payments made in connection with business acquisitions, not (721) (329) (297) Purchases of non-marketable securities (1.871) (521) (1,388) Proceeds from non-marketable securities 353 126 Other (745) (124) (924) Cash generated by (used in) investing activities 16,066 (46,446) (45,977) Financing activities: Proceeds from issuance of common stock 669 555 495 Payments for taxes related to net share settlement of equity awards (2.527) (1.874) (1.570) Payments for dividends and dividend equivalents (13,712) (12,769) (12,150) Repurchases of common stock (72,738) (32,900) (29,722) Proceeds from issuance of term debt, t 6,969 28,662 24,954 Repayments of term debt Change in commercial paper, net Cash used in financing activities Increase (decrease) in cash and cash equivalents Cash and cash equivalents, end of the year Supplemental cash flow disclosure (6,500)) (3,500) (2,500) (37) 3,852 (397) (87,876) (17,974) (20,890) 5,624 (195) (636) 25,913 20,289 20,484 Cash paid for income taxes, net Cash paid for interest 10,417 $ 11,591 $ 10,444 3,022 s 2,092 $ 1,316 See accompanying Notes to Consolidated Financial Statements APPLE