Refer to Apple Inc.’s consolidated financial statements in Appendix A and online in the filings section of www.sec.gov.

Requirements

1. Examine Note 5—Income Taxes—in the Notes to Consolidated Financial Statements. Income tax provision is another title for income tax expense. What was Apple’s income tax provision in 2016? Is the income tax provision likely to be equal to the amount Apple paid for its taxes in 2016? Why or why not? What was the company’s effective tax rate in 2016?

2. Examine Note 6—Debt. Did Apple borrow more or pay off more long-term debt during 2016? How can you tell? What was the company’s effective interest rate on its long-term debt? Why do you think the rate was so low?

3. How would you rate Apple’s overall debt position—risky, safe, or average? Compute three ratios at September 24, 2016, and September 26, 2015, that help answer this question.