Your parents are considering investing inApple Inc.common stock. They ask you, as an accounting expert, to make an analysis of the company for them. Financial statements of Apple are presented in Appendix A. The complete annual report, including the notes to its financial statements, is available at the company's website.

Click here to view Appendix A.

Answer the following questions.

(a1)

Make a 5-year trend analysis, using 2014 as the base year, of (1) net sales and (2) net income.(Round percentages to 0 decimal places, e.g. 15% and enter amounts in millions.)

APPLE INC.

Trend Analysis of Net Sales and Net Income

For the Five Years Ended 2018

2018

2017

2016

2015

2014

(1)Net sales$

enter net sales in millions

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%(2)Net income$

enter net income in millions

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Appendix A

Specimen Financial Statements: Apple Inc.

Once each year, a corporation communicates to its stockholders and other interested parties by issuing a complete set of audited financial statements. Theannual report, as this communication is called, summarizes the financial results of the company's operations for the year and its plans for the future. Many annual reports are attractive, multicolored, glossy public relations pieces, containing pictures of corporate officers and directors as well as photos and descriptions of new products and new buildings. Yet the basic function of every annual report is to report financial information, almost all of which is a product of the corporation's accounting system.

The content and organization of corporate annual reports have become fairly standardized. Excluding the public relations part of the report (pictures, products, etc.), the following are the traditional financial portions of the annual report:

• Financial Highlights
• Letter to the Stockholders
• Management's Discussion and Analysis
• Financial Statements
• Notes to the Financial Statements
• Management's Responsibility for Financial Reporting
• Management's Report on Internal Control over Financial Reporting
• Report of Independent Registered Public Accounting Firm
• Selected Financial Data

The official SEC filing of the annual report is called aForm 10-K, which often omits the public relations pieces found in most standard annual reports. The following areApple Inc.'s financial statements taken from the company's 2018 Form 10-K. The complete Form 10-K, including notes to the financial statements, is available at the company's website.

Apple Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except number of shares which are reflected in thousands and per share amounts)Years endedSeptember 29,

2018September 30,

2017September 24,

2016Net sales$265,595$229,234$215,639Cost of sales163,756141,048131,376Gross margin101,83988,18684,263Operating expenses:Research and development11,23611,58110,045Selling, general and administrative16,70515,26114,194Total operating expenses30,94126,84224,239Operating income70,89861,34460,024Other income/(expense), net2,0052,7451,348Income before provision for income taxes72,90364,08961,372Provision for income taxes13,37215,73815,685Net income$59,531$48,351$45,687Earnings per share:Basic$12.01$9.27$8.35Diluted$11.91$9.21$8.31Shares used in computing earnings per share:Basic4,955,3775,217,2425,470,820Diluted5,000,1095,251,6925,500,281See accompanying Notes to Consolidated Financial Statements.

Apple Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)Years endedSeptember 29, 2018September 30, 2017September 24, 2016Net income$59,531$48,351$45,687Other comprehensive income/(loss):Change in foreign currency translation, net of tax effects of $(1), $(77) and $8, respectively(525)22475Change in unrealized gains/losses on derivative instruments:Change in fair value of derivatives, net of tax benefit/(expense) of $(149), $(478) and $(7), respectively5231,3157Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $(104), $475 and $131, respectively382(1,477)(741)Total change in unrealized gains/losses on derivative instruments, net of tax905(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, $425 and $(863), respectively(3,407)(782)1,582Adjustment for net (gains)/losses realized and included in net income, net of tax expense/(benefit) of $21, $35 and $(31), respectively1(64)56Total change in unrealized gains/losses on marketable securities, net of tax(3,406)(846)1,638Total other comprehensive income/(loss)(3,026)(784)979Total comprehensive income$56,505$47,567$46,666