The notes are part of the financial statements. They give details that would clutter the statements. This case will help you learn to use a company's inventory notes. Refer to Apple Inc.'s consolidated financial statements and related notes in Appendix A and online in the filings section of www.sec.gov. and answer the following questions:
Requirements
1. How much was Apple Inc.'s merchandise inventory at September 27, 2014? At September 28, 2013? Does Apple Inc. include all inventory that it handles in the inventory account on its balance sheet?
2. Refer to Note 1, Summary of Significant Accounting Policies, Inventories section. How does Apple Inc. value its inventories? Which cost method does the company use?
3. Using the cost-of-goods-sold model, compute Apple Inc.'s purchases of inventory during the year ended September 27, 2014.
4. Did Apple Inc.'s gross profit percentage on company sales improve or deteriorate in the year ended September 27, 2014, compared to the previous year?
5. For this part, assume that beginning inventory on September 30, 2012, was $791 million. Compute inventory turnover for 2014 and 2013. Would you rate Apple Inc.'s rate of inventory turnover for the years ended September 27, 2014, and September 28, 2013, as fast or slow in comparison to most other companies in its industry? Explain your answer?