Case 3.24 LO 3 , 4, 6, 7 Analysis of liquidity' and profitability measures of Apple Inc. The following summarized data (amounts in millions) are taken from the September 27, 2014, and September 28, 2013, comparative financial statements of Apple Inc., a manufacturer of mobile communication and media devices, personal computers, portable digital music players, and seller of a variety of related software, services, accessories, networking solutions, and third-party digital content and applications: (Amounts Expressed in Millions) For the Fiscal Years Ended September 27 and September 28, respectively: 2014 2013 Net sales $182,795 $170,910 Costs of sales 112,258 106,606 Operating income 52,503 48,999 Net income $ 39,510 $ 37,037 At Year End: Assets Current assets: Cash and cash equivalents $ 13,844 $ 14,259 Short-term marketable securities 11,233 26,287 Accounts receivable, less allowances of $84 and $99, respectively 17,460 13,102 Inventories 2,111 1,764 Deferred tax assets 4,318 3,453 Vendor nontrade receivables 9,759 7,539 Other current assets 0,806 6,882 Total current assets 68,531 73,286 Long-term marketable securities 130,162 106,215 Property, plant, and equipment, net 20,624 16,597 Goodwill 4,616 1,577 Acquired intangible assets, net 4,142 4479 Other assets 3,764 5,146 Total assets $231,839 $207,000 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 30,196 $ 22,367 Accrued expenses 18,453 13,856 Deferred revenue 8,491 7,435 Commercial paper 6,308 0 Total current liabilities 63,448 43,658 Deferred revenue-noncurrent 3,031 2,625 Long-term debt 28,987 16,960 Other noncurrent liabilities 24,826 20,208 Total liabilities 120,202 83,451 Shareholders’ equity: Common stock and additional paid-in capital, $0.00001 par value, 12,600,000 shares authorized; 5,866,161 and 6,294,494 shares issued and outstanding, respectively 23,313 19,764 Retained earnings 37,152 104,256 Accumulated other comprehensive income (loss) 1,082 (471) Total shareholders’ equity 7 111,547 123,549 Total liabilities and shareholders’ equity. $231,839 $207,000 At September 29, 2012, total assets were $176,064 and total shareholders' equity was $118,210. Required: Calculate Apple Inc.’s working capital , current ratio , and acid-test ratio at September 27, 2014, and September 28, 2013. Round your ratio answers to one decimal place. Calculate Apple’s ROE for the years ended September 27, 2014, and September 28, 2013. Round your percentage answers to one decimal place. Calculate Apple’s ROI , showing margin and turnover, for the years ended September 27, 2014, and September 28, 2013. Round your turnover calculations to two decimal places. Round your margin and ROI percentages to one decimal place. Evaluate the company’s overall liquidity and profitability. Optional continuation of Case 3.24-trend analysis The following historical data were derived from Apple Inc/s consolidated financial statements (in millions) Note: Past data are not necessarily indicative of the results of future operations. 2014 2013 2012 2011 2010 Net sales $182,795 $170,910 $156,508 $108,249 $65,225 Net income 35,910 37,037 4 L73 3 25,922 14,013 Cash, cash equivalents, and marketable securities 155,239 146,761 121,251 81,570 51,011 Total assets 23i,S39 207,000 176,064 116,371 75AS3 Long-term debt 28,987 16,960 0 0 0 Other long-term obligations* 24.826 20,208 16,664 10,100 5,531 Total shareholders' equity m,547 123,549 118,210 76,615 47,791 *Other long-term obligations exclude noncurrent deferred revenue. Calculate Apple Inc.’s total liabilities for each year presented above. Are the trends expressed in these data generally consistent with each other? In your opinion, which of these trends would be most meaningful to a potential investor in common stock of Apple Inc.? Which trend would be least meaningful? What other data (trend or otherwise) would you like to have access to before making an investment in Apple Inc.?

Refer to the profitability ratios of Coca-Cola in Problem 4.26 in Chapter 4. Exhibit 5.17 presents risk ratios for Coca-Cola for 20062008. As we did within the chapter for PepsiCo, we utilize Coca-Colas footnote disclosures to extract the amount of trade accounts payable included within the line item accounts payable and accrued expenses. Exhibit 5.17 REQUIRED a. Assess the changes in the short-term liquidity risk of Coca-Cola between 2006 and 2008. b. Assess the changes in the long-term solvency risk of Coca-Cola between 2006 and 2008. c. Compare the short-term liquidity ratios of Coca-Cola with those of PepsiCo discussed in the chapter. Which firm appears to have more short-term liquidity risk? Explain. d. Compare the long-term solvency ratios of Coca-Cola with those of PepsiCo discussed in the chapter. Which firm appears to have more long-term solvency risk? Explain.

Value Chain Analysis and Financial Statement Relations. Exhibit 1.25 (page 68) presents common-size income statements and balance sheets for seven firms that operate at various stages in the value chain for the pharmaceutical industry. These common-size statements express all amounts as a percentage of sales revenue. Exhibit 1.25 also shows the cash flow from operations to capital expenditures ratios for each firm. A dash for a particular financial statement item does not necessarily mean the amount is zero. It merely indicates that the amount is not sufficiently large for the firm to disclose it. A list of the seven companies and a brief description of their activities follow. A. Wyeth: Engages in the development, manufacture, and sale of ethical drugs (that is, drugs requiring a prescription). Wyeths drugs represent primarily mixtures of chemical compounds. Ethical-drug companies must obtain approval of new drugs from the U.S. Food and Drug Administration (FDA). Patents protect such drugs from competition until other drug companies develop more effective substitutes or the patent expires. B. Amgen: Engages in the development, manufacture, and sale of drugs based on biotechnology research. Biotechnology drugs must obtain approval from the FDA and enjoy patent protection similar to that for chemical-based drugs. The biotechnology segment is less mature than the ethical-drug industry, with relatively few products having received FDA approval. C. Mylan Laboratories: Engages in the development, manufacture, and sale of generic drugs. Generic drugs have the same chemical compositions as drugs that had previously benefited from patent protection but for which the patent has expired. Generic-drug companies have benefited in recent years from the patent expiration of several major ethical drugs. However, the major ethical-drug companies have increasingly offered generic versions of their ethical drugs to compete against the generic-drug companies. D. Johnson Johnson: Engages in the development, manufacture, and sale of over-thecounter health care products. Such products do not require a prescription and often benefit from brand recognition. E. Covance: Offers product development and laboratory testing services for biotechnology and pharmaceutical drugs. It also offers commercialization services and market access services. Cost of goods sold for this company represents the salaries of personnel conducting the laboratory testing and drug approval services. F. Cardinal Health: Distributes drugs as a wholesaler to drugstores, hospitals, and mass erchandisers. Also offers pharmaceutical benefit management services in which it provides customized databases designed to help customers order more efficiently, contain costs, and monitor their purchases. Cost of goods sold for Cardinal Health includes the cost of drugs sold plus the salaries of personnel providing pharmaceutical benefit management services. G. Walgreens: Operates a chain of drugstores nationwide. The data in Exhibit 1.25 for Walgreens include the recognition of operating lease commitments for retail space. REQUIRED Use the ratios to match the companies in Exhibit 1.25 with the firms listed above.

Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 20Y8 20Y7 20Y6 20Y5 20Y4 Net income $1,078,700 $929,900 $781,400 $667,900 $566,000 Interest expense 366,800 334,800 289,100 220,400 175,500 Income tax expense 345,184 260,372 218,792 173,654 135,840 Total assets (ending balance) 8,226,651 8,779,231 6,276,721 6,620,869 5,020,826 Total stockholders' equity (ending balance) 2,543,681 3,148,667 2,003,133 2,553,135 1,531,881 Average total assets 8,502,941 7,527,976 6,448,795 5,517,391 4,722,930 Average stockholders' equity 2,846,174 2,575,900 2,278,134 2,042,508 1,808,307 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years:…

Case 3-24 (Static) Analysis of liquidity and profitability measures of Apple Inc. LO 3, 4, 6, 7 The following summarized data (amounts in millions) are taken from the September 30, 2017, and September 24, 2016, comparative financial statements of Apple Inc., a company that designs, manufactures, and markets mobile communication and media devices and personal computers; sells a variety of related software, services, accessories, networking solutions, and offers third-party digital content and applications: (Amounts Expressed in Millions) For the Fiscal Years Ended September 30 and September 24, respectively: 2017 2016 Net sales $ 229,234 $ 215,639 Costs of sales 114,048 131,376 Operating income 61,344 60,024 Net income $ 48,351 $ 45,687 At Year End: Assets Current assets: Cash and cash equivalents $ 20,289 $ 20,484 Short-term marketable securities 53,892 46,671 Accounts receivable, less allowance of $58 and $53,…

Question 8: You are provided with the Income Statement and the Balance Sheet of HTS software, Inc. for 2011. Required: (a) Calculate the ratios stated in the table below for HTS Software, Inc. for 2011 (b) Analyze the current financial position for the company from a time series and cross section viewpoint. (c) Break your analysis into an evaluation of the firm’s liquidity, activity, debt, profitability and market ratios. Historical and Industry Average Ratios HTS Software , Inc. Ratio 2010 2011 Industry2011 Current Ratio 2.6 — 2.7 Quick Ratio 1.8 — 1.75 Inventory Turnover 4.5 — 4.7 Average Collection Period 40days — 42 days Total Asset Turnover 1.2 — 1 Debt Ratio 20% — 21% Times Interest Earned 9 — 8.9 Gross Profit Margin 43% — 44% Operating Profit Margin 30% — 32% Net Profit Margin 20% — 21% Return on total assets 12% — 13% Return on Equity…

Question 1 The following are financial statements of Crane Company. Crane CompanyIncome StatementFor the Year Ended December 31, 2022 Net sales $2,192,500 Cost of goods sold 1,010,500 Selling and administrative expenses 900,500 Interest expense 78,000 Income tax expense 62,500 Net income $ 141,000 Crane CompanyBalance SheetDecember 31, 2022 Assets Current assets Cash $ 55,100 Debt investments 89,000 Accounts receivable (net) 168,400 Inventory 236,500 Total current assets 549,000 Plant assets (net) 572,500 Total assets $ 1,121,500 Liabilities and Stockholders’ Equity Current liabilities Accounts payable $ 152,000 Income taxes payable 31,000 Total current liabilities 183,000 Bonds payable 220,740 Total liabilities 403,740 Stockholders’ equity Common stock 345,000 Retained earnings 372,760…

Personal hotspot.. Used 72.4 MB Prepare the required financial statements for Metro Company Assume you are an analyst evaluating Metro Company. The following data are available in your financial analysis (unless otherwise indicated, all data are as of December 31, 2015): - 50 points Retained earnings, 12/31/2014 Gross profit margin ratio Day's sales in inventory Acid-test ratio Non current assets Day's sales in receivables Shareholder's equity to total debt Sales (all on credit) Common stock $15 par value; 10,000 shares issued and outstanding; issued at $21 per share. $98,000 25% 45 days 2.5 times $280,000 18 days 4 to 1 $920,000 Using these data, construct the December 31, 2015 balance sheet for your analysis. Operating expenses (excluding taxes and cost of goods sold for 2015) are $180,000. The tax rate is 40%. Assume a 360-day year in ratio computations. Current assets consist of cash, accounts receivable, and inventories. Your answer -> 41 •.. Honor Code | bart.. Lite…

Making Business Decisions: Analyzing Wal-Mart's Gross Profit Ratio You are considering an investment in the common stock of Wal-Mart. The following information is from the consolidated statements of income of Wal-Mart Stores, Inc. and Subsidiaries for the years ended January 31, 2016, and 2015 and the consolidated statements of operations for its competitor Target Corporation for the years ended January 30, 2016, and January 31, 2015 (included in the companies’ Form 10-Ks, amounts in millions of dollars): Wal-Mart Target (in millions) Year EndedJanuary 31, 2016 Year EndedJanuary 31, 2015 Year EndedJanuary 30, 2016 Year EndedJanuary 31, 2015 Sales* $478,614 $482,229 $73,785 $72,618 Cost of sales 360,984 365,086 51,997 51,278 *Described as net sales by Wal-Mart. Required: 1. Calculate the gross profit ratios for Wal-Mart and Target for 2016 and 2015. Enter the amounts as a percent, rounded to one decimal place. Wal-Mart's 2016 gross…

3: Chapter 03 Eukalayle Corporation's financial statements are provided here. Balance Sheet as of December 31, Cash and equivalents Accounts Receivable Inventories Net Plant and Equipment Total Assets Accounts Payable Notes Payable Accruals Long-Term Bonds Common Stock Retained Earnings Total Liabilities & Equity Income Statement as of December 31 Net Sales Operating Costs excluding depreciation and amortization Depreciation and Amortization Interest Taxes 40% Net Income WACC What was 2014 FCF? 2014 2013 40,000 48,000 80,000 80,000 60,000 38,400 220,000 153,600 400,000 320,000 2014 2013 20,000 19,200 28,000 9,600 12,000 22,400 104,000 76,800 165,200 134,400 70,800 57,600 400,000 320,000 2014 300,000.0 30,000.0 15,000.0 22,500.0 93,000.0 139,500.0 30.00%

Making Business Decisions: Analyzing Wal-Mart's Gross Profit Ratio You are considering an investment in the common stock of Wal-Mart. The following information is from the consolidated statements of income of Wal-Mart Stores, Inc. and Subsidiaries for the years ended January 31, 2016 and 2015 and the consolidated statements of operations for its competitor Target Corporation for the years ended January 30, 2016, and January 31, 2015 (included in the companies’ Form 10-Ks, amounts in millions of dollars): Wal-Mart Target (in millions) Year EndedJanuary 31, 2016 Year EndedJanuary 31, 2015 Year EndedJanuary 30, 2016 Year EndedJanuary 31, 2015 Sales* $478,614 $482,229 $73,785 $72,618 Cost of sales 360,984 365,086 51,997 51,278 *Described as net sales by Wal-Mart. Calculate the gross profit ratios for Wal-Mart and Target for 2016 and 2015. Enter the amounts as a percent, rounded to one decimal place.

BRIEF EXERCISE 8.1 Using the following data from the comparative statements of financial position of Jane Hill Company, illustrate horizontal analysis. 30-Jun-16 30-Jun-15 $ 540,000 $ 840,000 $ 3,640,000 Accounts Receivable $ 400,000 Inventory $ 600,000 Total Assets $ 2,800,000 EXERCISES: Question 1. The following is a summary of key reported figures for Woolworths Ltd's business segments for 2016 and 2017. Report on the profitability of the business segments. Sales revenue and operating profit before tax by business group $m 2017 2016 Sales revenue EBIT Sales revenue EBIT Australian food and liquor 37 549.2 2 817.2 36 176.1 2 678.9 Big W 4 179.6 178.4 4 158.3 177.0 New Zealand 4 301.8 224.5 4 110.5 191.9 supermarkets Petrol 6 714.2 127.1 6 025.3 117.6 Source: Woolworths Ltd 2012, annual report, p. 120.

Question 2: The Method of Comparables: Dell, Inc. Here are some accounting numbers and market values (in millions) for Hewlett-Packard and Lenovo Group for 2008. These two computer manufacturers are considered to be comparables for Dell, Inc. Sales Earnings Book Value Market Value Hewlett-Packard Co. $84,229 $7,264 $38,526 $115,700 Lenovo Group Ltd. 14,590 161 1,134 6,381 a. Calculate price-to-sales, price-earnings (P/E), and price-to-book (P/B) ratios for Hewlett-Packard and Lenovo. b. Dell reported the following numbers for fiscal year 2008: $61,133 million $ 2,947 million Book value $ 3,735 million Sales Earnings Apply multiples for Hewlett-Packard and Lenovo to price Dell's 2,060 million out- standing shares. What difficulties did you encounter?

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Chapter 3 Solutions

(Amounts Expressed in Millions)
For the Fiscal Years Ended September 27 and September 28, respectively:	2014	2013
Net sales	$182,795	$170,910
Costs of sales	112,258	106,606
Operating income	52,503	48,999
Net income	$ 39,510	$ 37,037
At Year End: Assets
Current assets:
Cash and cash equivalents	$ 13,844	$ 14,259
Short-term marketable securities	11,233	26,287
Accounts receivable, less allowances of $84 and $99, respectively	17,460	13,102
Inventories	2,111	1,764
Deferred tax assets	4,318	3,453
Vendor nontrade receivables	9,759	7,539
Other current assets	0,806	6,882
Total current assets	68,531	73,286
Long-term marketable securities	130,162	106,215
Property, plant, and equipment, net	20,624	16,597
Goodwill	4,616	1,577
Acquired intangible assets, net	4,142	4479
Other assets	3,764	5,146
Total assets	$231,839	$207,000
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$ 30,196	$ 22,367
Accrued expenses	18,453	13,856
Deferred revenue	8,491	7,435
Commercial paper	6,308	0
Total current liabilities	63,448	43,658

Deferred revenue-noncurrent	3,031	2,625
Long-term debt	28,987	16,960
Other noncurrent liabilities	24,826	20,208
Total liabilities	120,202	83,451
Shareholders’ equity:
Common stock and additional paid-in capital, $0.00001 par value, 12,600,000 shares authorized; 5,866,161 and 6,294,494 shares issued and outstanding, respectively	23,313	19,764
Retained earnings	37,152	104,256
Accumulated other comprehensive income (loss)	1,082	(471)
Total shareholders’ equity⁷	111,547	123,549
Total liabilities and shareholders’ equity.	$231,839	$207,000

	2014	2013	2012	2011	2010
Net sales	$182,795	$170,910	$156,508	$108,249	$65,225
Net income	35,910	37,037	4 L73 3	25,922	14,013
Cash, cash equivalents, and marketable securities	155,239	146,761	121,251	81,570	51,011
Total assets	23i,S39	207,000	176,064	116,371	75AS3
Long-term debt	28,987	16,960	0	0	0
Other long-term obligations*	24.826	20,208	16,664	10,100	5,531
Total shareholders' equity	m,547	123,549	118,210	76,615	47,791
*Other long-term obligations exclude noncurrent deferred revenue.