Question: Use the information contained in these financial statements and notes to complete this case. All answers should be for the most current year (September 24,
Use the information contained in these financial statements and notes to complete this case. All answers should be for the most current year (September 24, 2016) unless asked otherwise. Many companies show amounts in the thousands or millions please state amounts as shown on the financial statements. Do not add zeros. You do not need to include dollar signs.
Selected financial statements of Apple, Inc. follow.
Financial Statement Analysis Ratios Must show your work for all ratios. Calculate each ratio to three decimal places. (Page numbers are for referencing the formulas in your textbook.) (100 Points Total)
| 1. | Chapters 3 & 13 (pages 128, 127, 597) |
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| Calculate the Current ratio. (4) Does this ratio appear favorable or unfavorable? (4) Why? (4)
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| b. Calculate the Profit Margin ratio. (4)Does this ratio appear favorable or unfavorable? (4) Why? (4)
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| 2. | Chapters 6, 7 & 13 (pages 327, 285, 597) |
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| a. Calculate the Accounts Receivable Turnover ratio. (8)
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| Calculate the Days Sales Uncollected ratio. (6) Does this ratio appear favorable or unfavorable? Why? (4)
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| 3. | Chapters 8 & 13 (pages 367, 597) |
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| a. Calculate the Total Asset Turnover ratio. (6)
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| 4. | Chapters 2 & 13 (pages 77, 597) |
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| a. Calculate the Debt ratio. (4) What does this ratio tell you about Apples risk? (4)
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| 5. | Chapters 10 & 13 (pages 451, 452, 593, 597) \ |
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| Calculate the Debt-to-Equity Ratio. (4)
What does this ratio tell you about Apples capital structure and risk? (4)
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| 6. | Chapters 11 & 13 (pages 501, 595, 596, 597) |
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| What is the current market price of the stock? This is not in the financial statements provided. It is noted on Apples website or go to www.yahoofinance.com to get the quote. The ticker symbol for Apple is AAPL.
Price __________ (4)
Date found: ____________
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| Calculate the Dividend Yield. (4)
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| Calculate the Price-Earnings Ratio. (4)
What range do analyst give for a stock to be considered overpriced? (2)
What range do analyst give for a stock to be considered underpriced? (2)
What does this tell you about Apples stock price? Why? (4)
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| 7. | Chapters 5 & 13 (page 227, 597) |
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| Calculate the Inventory turnover ratio. (6)
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| Calculate the Days Sales in Inventory ratio. (6)
Is this favorable or unfavorable? Why? (4)
II. Summar Your superior asks you to analyze this companys financial condition (liquidity, efficiency, solvency, profitability). Would you recommend it as a worthy investment (yes or no)? Support your opinion using answers from part I (#1-7) above. You must give at least five reasons to support your answer to receive full credit.
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CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 24 September 26 September 27 2016 2015 2014 Net Sales 215,639 S 233,715 S 182,795 112,258 131,376 Cost of sales 140,089 93,626 70,537 Gross margin 84,263 Operating expenses: Research and development 10.045 8.067 6.041 11,993 Selling, general and administrative 14,194 14,329 Total operating expenses 24,239 22,396 18.034 71,230 60,024 Operating income 52,503 Other income/(expense), net 1,348 1,285 980 Income before provision for income taxes 72,515 53,483 61,372 13,973 Provision for income taxes 15685 19.121 Net income 45,687 S 53,394 S 39,510 Earnings per share: 9.28 S Basic 8.35 6.49 8.31 9.22 45 Diluted Shares used in computing earnings per share 5470,820 Basic 5,753,421 6,085,572 5,500,281 6,122,663 Diluted 5,793,069 Cash dividends declared per share 1.82
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