Need help with finance hw?

Jul 7th, 2015
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Section 1: Financial Statements and Ratios

 Refer to the Apple financial statements in the appendix

1a. What is the applicable marginal tax rate? (b) What is the change in net working capital between 2013 and 2014? (c) Estimate the long-term solvency measures of the company

2a. Using the Dupont Identity, estimate whether or not the company has a potential for sustainable external growth. (b) Carefully explain whether sales, assets, or equities are the major contributors to net income. (c) Examine the relationship between the net income to sales ratio and research and development.

  Section 2: The time value of Money

 You may use a financial calculator, financial table, or Excel to solve the following problems

3.Suppose your firm deposits $10,000 in a bank today with the expectation that the deposit will earn 5 percent interest rate (or rate of return) for 10 years, what is the expected value of your deposit at the end of 10 years (assuming that interest is compounded annually)?

4.Suppose you have been assigned to manage $20,000 worth of investors’ money and you want to generate income from that amount of money over a period of 7 years. Imagine that you have the option of investing in a project with an expected cash flow: $7,000; $5,500; $2,500; 2,500; 2,500; 2,000; and $1,500 at a 6 percent required rate of return, why will you commit or refuse to commit the money of your investors to the project?

BONUS Question

What is the internal rate of return?

   APPENDIX

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

x

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 27, 2014

or

 

¨

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from    to  

Commission file number: 000-10030

 

 

 

APPLE INC.

(Exact name of registrant as specified in its charter)

APPLE INC.

(Exact name of registrant as specified in its charter)

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except number of shares which are reflected in thousands and per share amounts)

 

 

 

Years ended

 

 

 

September 27,
2014

 

 

September 28,
2013

 

 

September 29,
2012

 

Net sales

 

$

182,795

 

 

$

170,910

 

 

$

156,508

 

Cost of sales

 

 

112,258

 

 

 

106,606

 

 

 

87,846

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin

 

 

70,537

 

 

 

64,304

 

 

 

68,662

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

Research and development

 

 

6,041

 

 

 

4,475

 

 

 

3,381

 

Selling, general and administrative

 

 

11,993

 

 

 

10,830

 

 

 

10,040

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

18,034

 

 

 

15,305

 

 

 

13,421

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

 

52,503

 

 

 

48,999

 

 

 

55,241

 

Other income/(expense), net

 

 

980

 

 

 

1,156

 

 

 

522

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

53,483

 

 

 

50,155

 

 

 

55,763

 

Provision for income taxes

 

 

13,973

 

 

 

13,118

 

 

 

14,030

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

39,510

 

 

$

37,037

 

 

$

41,733

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

Basic

 

$

6.49

 

 

$

5.72

 

 

$

6.38

 

Diluted

 

$

6.45

 

 

$

5.68

 

 

$

6.31

 

 

 

 

Shares used in computing earnings per share:

 

 

 

Basic

 

 

6,085,572

 

 

 

6,477,320

 

 

 

6,543,726

 

Diluted

 

 

6,122,663

 

 

 

6,521,634

 

 

 

6,617,483

 

Cash dividends declared per common share

 

$

1.82

 

 

$

1.64

 

 

$

0.38

 

Operating Expenses

Operating expenses for 2014, 2013 and 2012 are as follows (dollars in millions):

 

 

 

2014

 

 

Change

 

 

2013

 

 

Change

 

 

2012

 

Research and development

 

$

6,041

 

 

 

35%

 

 

$

4,475

 

 

 

32%

 

 

$

3,381

 

Percentage of total net sales

 

 

3%

 

 

 

 

3%

 

 

 

 

2%

 

Selling, general and administrative

 

$

11,993

 

 

 

11%

 

 

$

10,830

 

 

 

8%

 

 

$

10,040

 

Percentage of total net sales

 

 

7%

 

 

 

 

6%

 

 

 

 

6%

 

Total operating expenses

 

$

18,034

 

 

 

18%

 

 

$

15,305

 

 

 

14%

 

 

$

13,421

 

Percentage of total net sales

 

 

10%

 

 

 

 

9%

 

 

 

 

9%

 

The following table presents the Company’s dividends, dividend equivalents, share repurchases and net share settlement activity from the start of the capital return program in August 2012 through September 2014 (in millions):

 

 

 

Dividends and
Dividend
Equivalents Paid

 

 

Accelerated Share
Repurchases

 

 

Open Market
Share
Repurchases

 

 

Taxes Related
to Settlement of
Equity Awards

 

 

Total

 

2014

 

$

11,126

 

 

$

21,000

 

 

$

24,000

 

 

$

1,158

 

 

$

57,284

 

2013

 

 

 10,564

 

 

 

 13,950

 

 

 

 9,000

 

 

 

 1,082

 

 

 

 34,596

 

2012

 

 

2,488

 

 

 

0

 

 

 

0

 

 

 

56

 

 

 

2,544

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

$

24,178

 

 

$

34,950

 

 

$

33,000

 

 

$

2,296

 

 

$

94,424

 

ONSOLIDATED BALANCE SHEETS

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

 

 

 

September 27,
2014

 

 

September 28,
2013

 

ASSETS:

 

Current assets:

 

 

Cash and cash equivalents

 

$

13,844

 

 

$

14,259

 

Short-term marketable securities

 

 

11,233

 

 

 

26,287

 

Accounts receivable, less allowances of $86 and $99, respectively

 

 

17,460

 

 

 

13,102

 

Inventories

 

 

2,111

 

 

 

1,764

 

Deferred tax assets

 

 

4,318

 

 

 

3,453

 

Vendor non-trade receivables

 

 

9,759

 

 

 

7,539

 

Other current assets

 

 

9,806

 

 

 

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

 

 

 

4,179

 

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 – non-current

 

 

3,031

 

 

 

2,625

 

Long-term debt

 

 

28,987

 

 

 

16,960

 

Other non-current liabilities

 

 

24,826

 

 

 

20,208

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

120,292

 

 

 

83,451

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

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

 

 

87,152

 

 

 

104,256

 

Accumulated other comprehensive income/(loss)

 

 

1,082

 

 

 

(471

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

 

111,547

 

 

 

123,549

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

231,839

 

 

$

207,000

 

 

 

 

 

 

 

 

 


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