# Need help with finance hw?

Jul 7th, 2015
Anonymous
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Question description

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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