Reference no: EM131104826

Apple Inc Questions

Analysis of liquidity and profitability measures of Apple Inc. The following summarized data (amounts in millions) are taken from the September 27, 2008, and September 29, 2007, comparative financial statements of Apple Inc. , a manufacturer of personal computers, portable digital music players, and mobile communications devices, along with a variety of related software, services, peripherals, and networking solutions.

	2008	2007
(Amounts Expressed in Millions) For the Fiscal Years Ended September 27 and September 29, respectively
Net sales	$32,479	$24,006
Costs of sales	21,334	15,852
Operating income	6,275	4,409
Net income	$ 4,834	$ 3,496
At Year End
Assets
Cash and cash equivalents	$11,875	$ 9,352
Short-term investments	12,615	6,034
Accounts receivable, net	2,422	1,637
Inventories.	509	346
Deferred tax assets	1,447	782
Other current assets	5,822	3,805
Property, plant, and equipment, net	2,455	1,832
Goodwill	207	38
Acquired intangible assets, net	285	299
Other assets	1,935	1,222
Total assets	$39,572	$25,347
Liabilities and Shareholders' Equity
Accounts payable	$ 5,520	$ 4,970
Accrued expenses.	8,572	4,310
Non-current liabilities	4,450	1,535
Common stock, no par value.	7,177	5,368
Retained earnings	13,845	9,101
Accumulated other comprehensive income	8	63
Total liabilities and shareholders' equity	$39,572	$25,347

Total liabilities and shareholders' equity $39,572 $25,347

At September 30, 2006, total assets were $17,205 and total shareholders' equity was $9,984.

Required:

a. Calculate Apple Inc.'s working capital, current ratio, and acid-test ratio at September 27, 2008, and September 29, 2007. Round your ratio answers to one decimal place.

b. Calculate Apple's ROE for the years ended September 27, 2008, and September 29, 2007. Round your percentage answers to one decimal place.

c. Calculate Apple's ROI, showing margin and turnover, for the years ended September 27, 2008, and September 29, 2007. Round your turnover calculations to two decimal places. Round your margin and ROI percentages to one decimal place.

d. Evaluate the company's overall liquidity and profitability.

Optional continuation of Case 3.17-trend analysis

The following historical data were derived from Apple Inc.'s consolidated financial statements (in millions).

	2008	2007	2006	2005	2004
Net sales	$32,479	$24,006	$19,315	$13,931	$8,279
Net income	4,834	3,496	1,989	1,328	266
Cash, cash equivalents, and short-term investments	24,490	15,386	10,110	8,261	5,464
Total assets	39,572	25,347	17,205	11,516	8,039
Shareholders' equity	21,030	14,532	9,984	7,428	5,063
Long-term debt	-	-	-	-	-

e. Calculate Apple Inc.'s total liabilities for each year presented above. f. Are the trends expressed in these data generally consistent with each other? g. 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?

h. What other data (trend or otherwise) would you like to have access to before making an investment in Apple Inc.?