PART $1(38$ pts$)$: To answer the below questions $1-5,$ please use the attached financial statements of Apple company, presented in Appendix $1.$

Question $1(12$ pts$)$: Using the year $2017$ as the base year, compute trend percentages for fiscal years $2017,2018,$ and $2019$ for total net sales, total cost of sales, operating income, and net income and fill out the table $($Only answers should be given. No partial credit!$)$

Question $2(6$ pts$)$: By referring your answers to question $1$; comment on if there is a clear increasing$/$decreasing trend for the specified items.

If there are any trends, please specify whether the trends are compatible with each other or not $($if trend percentages go hand$-$in$-$hand for all items or diverge from each other$).$ If the trend percents diverge from each other, what could be the possible reason for it$?$

Answer:

Question $3(8$ pts$)$:

a$.$ Calculate the profit margin ratio and return on assets for the years $2019$ and $2018,$ and fill in the below table. $($Only answers should be given. No partial credit!$)$

b$.$ Did profit margin improve or worsen for Apple? $($Explain all your rationale, please. Only the answer of improve$/$worsen will not be accepted$)$

Answer:

c$.$ Based on return on assets, please comment on whether Apple's operating efficiency improved or worsened in $2019$ versus $2018.($Explain all your rationale, please. Only the answer of improve$/$worsen will not be accepted$)$

Answer: Question $4(4$ pts$)$: Using current assets as a percent of total assets to measure liquidity, did Apple's assets become more liquid or less liquid in $2019?($Explain all your rationale, please. Only the answer of yes$/$no will not be accepted.$)$

Answer:

Question $5(8$ pts$)$: Here are the additional key figures for Apple and Google.

$\backslash$begin$\{$tabular$\}\{$lrr$\}$

$\backslash$$ millions & Apple & $\backslash$multicolumn$\{1\}\{$c$\}\{$ Google $\}\backslash \backslash$

$\backslash$hline Cash and equivalents & $\backslash (\backslash$$ $48,844\backslash )$ & $\backslash (\backslash$$ $18,498\backslash )\backslash \backslash$

Accounts receivable, net & $22,926$ & $25,326\backslash \backslash$

Inventories & $4,106$ & $999\backslash \backslash$

Retained earnings & $45,898$ & $152,122\backslash \backslash$

Cost of sales & $161,782$ & $71,896\backslash \backslash$

Revenues & $260,174$ & $161,857\backslash \backslash$

Total assets & $338,516$ & $275,909$

$\backslash$end$\{$tabular$\}$

a$.$ If Google paid a dividend, would the value of retained earnings increase or decrease? $($Explain your rationale, please. Only the answer of increase$/$decrease will not be accepted$)$

Answer:

b$.$ Which company has the better gross $($profit$)$ margin ratio on sales? $($Show all your calculations, please. Only the answer of Apple$/$Google will not be accepted$)$

Answer:

Apple Inc.

CONSOLIDATED BALANCE SHEETS

$($In millions, except number of shares which are reflected in thousands and par value$)$

September $28,2019$

September $29,2018$

ASSETS

LLABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

See accompanying Notes to Consolidated Financial Statements.