Refer to Apple’s statement of cash flows in Appendix A.

(a) Which method is used to compute its net cash provided by operating activities?

(b) Its balance sheet shows an increase in accounts receivable from September 24, 2016, to September 30, 2017; why is this increase in accounts receivable subtracted when computing net cash provided by operating activities for the fiscal year ended September 30, 2017?

Data from Apple's

 

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Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 24, 2016 September 30, 2017 ASSETS Current assets 24 20,484 Cash and cash equivalents 20,289 53,892 Short-term marketable securities 46,671 Accounts receivable, less allowances of $58 and $53, respectively 17,874 15,754 Inventories 4,855 2,132 Vendor non-trade receivables 17,799 13,545 Other current assets 13,936 8,283 128,645 Total current assets 106,869 170,430 Long-term marketable securities 194,714 Property, plant and equipment, net 33,783 27,010 Goodwill 5,717 5,414 2.298 Acquired intangible assets, net 3,206 Other non-current assets 10,162 8,757 375,319 Total assets 321,686 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities 37,294 Accounts payable Accrued ex penses 49,049 25,744 22,027 7,548 De ferred revenue 8,080 Commercial paper 11,977 8,105 Current portion of long-term debt 6,496 3,500 100,814 Total current liabilities 79,006 Deferred revenue, non-current 2,836 2,930 97,207 Long-term debt 75,427 Other non-current liabilities 40,415 36,074 193,437 Total liabilities 241,272 Commitments and contingencies Shareholders' equity Common stock and additional paid-in capital, S0.00001 par value: 12,600,000 shares authorized; 5,126,201 and 5,336,166 shares issued and outstanding, respectively Retained earnings 35,867 31,251 98,330 96,364 Accumulated other comprehensive income (loss) Total shareholders' equity (150) 634 134,047 128,249 Total liabilities and shareholders' equity 375,319 321,686 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, 2017 September 24, 2016 September 26, 2015 Net sales 229,234 215,639 24 233,715 Cost of sales 141,048 131,376 84,263 140,089 93,626 Gross margin 88,186 Operating expenses Research and development 11,581 10,045 8,067 Selling, general and administrative Total operating ex penses 15,261 26,842 14,194 24,239 14,329 22.396 Operating income Other income (expense), net 60,024 1,348 71,230 61,344 2,745 1,285 Income before provision for income taxes 64,089 61,372 72,515 Provision for income taxes 15,738 15,685 19,121 Net income 48,351 45,687 53,394 Earnings per share: Basic Diluted %24 9.27 8.35 %24 9.28 9.21 8.31 9.22 Shares used in computing earnings per share: Basic 5,217,242 5,470,820 5,753,421 Diluted 5,251,692 5,500,281 5,793,069 Cash dividends declared per share 2.40 2.18 1.98 See accompanying Notes to Consolidated Financial Statements. Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) September 30, 2017 September 24, 2016 September 26, 2015 Years ended Net income 48,351 45,687 S 53,394 Other comprehensive income (loss): Change in foreign currency translation, net of tax effects of S(77), $8 and $201, respectively 224 75 (411) Change in unrealized gains/losses on derivative instruments: Change in fair value of derivatives, net of tax benefit (expense) of S(478), $(7) and $(441), respectively 1,315 2,905 Adjustment for net (gains) losses realized and included in net income, net of tax expense (bene fit) of $475, $131 and $630, respective ly Total change in unrealized gains/losses on derivative instruments, net of tax (1,477) (741) (3,497) (162) (734) (592) Change in unrealized gains/losses on marketable securities: Change in fair value of marketable securities, net of tax benefit (expense) of $425, $(863) and $264, respectively (782) 1,582 (483) Adjustment for net (gains) losses realized and included in net income, net of tax expense (bene fit) of $35, S(31), and $(32), respectively Total change in unrealized gains/losses on marketable securities, net of tax (64) 56 59 (846) 1,638 (424) Total other comprehensive income (loss) (784) 979 (1,427 Total comprehensive income 47,567 46,666 51,967 See accompanying Notes to Consolidated Financial Statements.