Chapter $15$ :

Chapter Review Business Decision $($#$25)$: Evaluating Financial Performance

In $2010,$ Apple introduced the iPad, and the sales of this device helped boost Apple revenues significantly. From the consolidated statements of income and balance sheets for Apple, prepare the following financial ratios for $2010$ and $2011.$

Current ratio

Acid test ratio

Asset turnover ratio

Debt$-$to$-$assets ratio

Debt$-$to$-$equity ratio

Net profit margin

Return on investment

Based on your calculations of the financial ratios for Apple, for each ratio, determine whether the $2011$ figure was better or worse than the ratio for $2010.$

How would you rate Apple's financial ratios in $2010$ and $2011?$

Apple lac.Apple Inc.

CONSOLIDATED BALANCE SHEETS

$($In millions, except number of shares which are

reflected in thousands$)$

Assets:

September $24,2011$

Currest assebs:

Cash and cash equivalents

Short$-$kenm marketable securitics

$\backslash$table$[[9,815],[16,137],[5,369],[776],[2,014],[6,348],[4,529],[44,988]]$

Long$-$term madetakle securities

$55,618$

Property, plant and equipment, net $7,777$

Goodwill $8\%$

Acquired intangible assets, net $3\mathrm{.}536$

Other assets

$3\mathrm{.}55\%$

Total ausets

$$116\mathrm{.}371$

Liabilities and Shareholders ${?}^{}$Equity:

Current liakilities:

Accounts puyable

Accrued expenses

$ $14,632$

Deferred revenue

Tetal current liabilitics

Deferred revenue$-$son$-$current

Other non$-$current flabilities

Total liahilities

Commitments and contingencies

Sharchollen" cyuity:

Common stock, no par value: $1,800,000$ shars authorized:

$929\mathrm{.}277$ and $915\mathrm{.}970$ shares is wead and outstanding.

Repectively

$13,331$

Retainsd carniags

$62,841$

Accumulated ether comprobernine insumed lows$)$

$445$

Treat storthotters cepurty

$76\mathrm{.}615$

Tedail lialibiaion and abarcheideri cymily

$$116\mathrm{.}371$CONSOLIDATED STATEMENTS

OF OPERATIONS

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

$\backslash$table$[[$Three Years Ended September $24,2011,2011,2010],[$Net sales,$ $108,249,$$ $65,225],[$Cost of sales,$64,431,39,541],[$Gross margin,$43,818,25,684],[$Operating expenses:$],[$Research and developenent,$2\mathrm{.}429,1\mathrm{.}782],[$Selling$.$ general and administrative,$7\mathrm{.}599,5,517],[$Totilf operating expenus,$10,028,7\mathrm{.}299],[$Operating inovme,$3,790,18,385],[$Other income and experme,$415,155],[$Tasome tw fore providon for incomes lases,$34,205,15$ erd$],[$Provision for income taxes,$8,283,4,527],[$Net income,$5,25,92?,514\mathrm{.}013],[$Eamings per common share:$],[$Basic$,528\mathrm{.}05,515\mathrm{.}71],[$Diluted$,527,68,515\mathrm{.}15]]$

Shares used in computing carnings per share:

Banic

$924\mathrm{.}358$

$909\mathrm{.}461$

Diliund

$936\mathrm{.}645$

$924\mathrm{.}712$