Financial statements often serve as a starting point in formulating budgets. Review Apple’s financial statements in Appendix A to determine its cash paid for acquisitions of property, plant, and equipment in the current year and the budgeted cash needed for such acquisitions in the next year.

Required 1. Which financial statement reports the amount of cash paid for acquisitions of property, plant, and equipment? Explain where on the statement this information is reported.

2. Indicate the amount of cash

(a) paid for acquisitions of property and equipment in the year ended September 26, 2015, and

(b) to be paid (budgeted for) next year under the assumption that annual acquisitions of property and equipment equal 20% of the prior year’s net income.

Fast Forward 3. Access Apple’s financial statements for a year ending after September 26, 2015, from either its website [Apple.com] or the SEC’s EDGAR database [SEC.gov]. Compare your answer for part 2 with actual cash paid for acquisitions of property and equipment for that fiscal year. Compute the error, if any, in your estimate. Speculate as to why cash paid for acquisitions of property and equipment was higher or lower than your estimate.

Data From Apple Financial Statement Appendix A

Companies often budget selling expenses and general and administrative expenses (SGA) as a
percentage of expected sales.
Required
1. For both Apple and Google, list the prior three years’ sales (in dollars) and total selling expenses and
general and administrative expenses (in dollars). Use the financial statements in Appendix A.
2. Compute the ratio of total selling expenses and general and administrative expenses to sales for each
of the three years.
3. Using the data from part 2, predict both companies’ total selling expenses and general and administrative
expenses (in dollars) for the next two years. (If possible, compare your predictions to actual
amounts for those years.)

Data From Appendix Apple Financial Statement 

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Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) September 26, 2015 Years ended Net sales Cost of sales Operating expenses Gross margin Research and development Selling, general and administrative Total operating expenses Operating income Other income, net Income before provision for income taxes Provision for income taxes Net income Earnings per share: Basic Diluted Shares used in computing earnings per share: Basic Diluted Cash dividends declared per common share $ September 27, 2014 September 28, 2013 233,715 $ 182,795 $ 170,910 140,089 112,258 106,606 93,626 70,537 64,304 8,067 6,041 4,475 14,329 11,993 10,830 22,396 18,034 15,305 71,230 52,503 48,999 1,285 980 1,156 72,515 53,483 50,155 19,121 13,973 13,118 53,394 39,510 37,037 SASA 9.28 6.49 5.72 $ 9.22 6.45 5.68 SA 5,753,421 5,793,069 6,085,572 6,122,663 1.98 1.82 FA 6,477,320 6,521,634 1.64