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Accounting Practice Problem

$ millions Interest expense 2017 2016 $2,323 $1,456 2015 $ 733 Required: 1. Compute times interest earned for each of the three years shown. 2. Is Apple in a good or bad position to pay interest obligations? Assume an industry average 3. Identify Apple's total accrued expenses in 2017. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute times interest earned for each of the three years shown. (Round your answer to 2 decimal 2017 26.40 2016 41.20 2015 97.20 Times interest earned ratio $ millions Interest expense 2017 2016 $2,323 $1,456 2015 $ 733 Required: 1. Compute times interest earned for each of the three years shown. 2. Is Apple in a good or bad position to pay interest obligations? Assume an industry a 3. Identify Apple's total accrued expenses in 2017. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Is Apple in a good or bad position to pay interest obligations? Assume an industry average of Is Apple in a good or bad position? Good position o millions terest expense 2017 2016 $2,323 $1,456 2015 $733 quired: Compute times interest earned for each of the three years shown. Is Apple in a good or bad position to pay interest obligations? Assume an industry ave Identify Apple's total accrued expenses in 2017. * Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Identify Apple's total accrued expenses in 2017. (Enter your answers in millions of dollars.) Apple's total accrued expenses $ 25,744 million APPL Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 30, 2017 September 24, 2016 ASSETS Current assets Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowances of $58 and 553, respectively Inventories Vendor non-trade receivables Other current assets Total current assets Long-term marketable securities table securities Property, plant and equipment, net Goodwill Acquired intangible assets, net Other non-current assets Total assets 20.289 53,892 17.874 4,855 17.799 13.936 128,645 194.714 33,783 5,717 2,298 10,162 375,319 20,484 46,671 15,754 2,132 13,545 8.283 106,869 170,430 27.010 5,414 3.206 8.757 321.686 BILITIES AND SHAREHOLDERS' EQUITY Currentlisbilities Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Deferred revenue, cum Logo debe Other current Total liabilities Com and contingencies 49,019 25,744 7.5-48 11.977 6,496 100,814 2016 97.207 37.294 22,027 8.00 8,105 500 79,006 2,930 75427 16.074 193,437 241.222 Shareholders' quity Common stock and dial puid in capital, 50000 p uthorized, 5.126201 and 5.36.166 shares and Rendering alo: 12.600.000 shares standing respectively 11.251 96.164 Total shareholders' equity 15867 9810 (150) 134,047 375,319 126.249 121.686 See companying Notes to Consolidated Financial Statements APE September 26, 2015 233,715 140,089 93,626 CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 30, 2017 September 24, 2016 Net sales 229,234 215,639 Cost of sales 141,048 131,376 Gross margin 88,186 84,263 Operating expenses Research and development 11,581 10,045 Selling, general and administrative 15.261 14,194 Total operating expenses 26,842 24.239 Operating income 61,344 60,024 Other income (expense), net 2,745 1,348 Income before provision for income taxes 64,089 61,372 Provision for income taxes 15.738 15,685 Net income 48,351 45,687 8,067 14.329 22,396 71.230 1.285 722515 19.121 53394 9.27 9.21 8.35 8.31 9.28 9.22 Earnings per share: Basic Diluted Shares used in computing earnings per share: Basic Diluted Cash dividends declared per share 5,217.242 5.251,692 2.40 5,470,820 5,500,281 2.18 5.753,421 5.793,069 1.98 See accompanying Notes to Consolidated Financial Statements September 26, 2015 5 3394 224 Apple Inc. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) Years ended September 30, 2017 September 24, 2016 Net income 48,351 $ 45,687 3 Other comprehensive income doss) Change in foreign currency translation, net of tax effects of 507.58 and 5201, respectively Changin nalized in losses on derivative Instruments Change is fair value of derivatives, net of tax benefit (expense) of (478). SCT) and (441), respectively 1,315 Adjustment for begin) losses realized and included in net income, of expense benefit of $475, 5131 and 5630, respectively (1.477) Total change in lined in losses on derivative Instruments, net of tax Change is called g e omate securities Change in fair value of marketable securities, set of tax beacht expense of $425, 3) d 1264, respectively (782) 1.382 Adjustment for et glas) losses realized and included in income net of tax expense of 535. 1), and respectively 2.905 0.497 (162) (592) (483) Total Shareholders' Equity $ 111,547 53,394 (1.427) (11,627) (36,026) 3,586 (840) 748 748 21416 Apple Inc. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In millions, except number of shares which are reflected in thousands) Accumulated Other Common Stock and Comprehensive Additional Paid-In Capital Retained Income Shares Amount Earnings (Loss) Balances as of September 27, 2014 5,866,161 $ 23.313 87.152 1,082 Net income 53,394 Other comprehensive income (loss) (1,427) Dividends and dividend equivalents declared (11.627) Repurchase of common stock (325,032) (36,026) Sture-based compensation 3.586 Common stock issued, net of shares withheld for employee taxes 37,624 (231) (609) Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 26, 2015 5.578,753 92,284 Net income 45,687 Other comprehensive income (loss) Dividends and dividend equivalents declared (12.188) Repurchase of common stock (279,609) (29.000) Share-based compensation 4.262 Common stock issued, net of shares withheld for employee taxes 37,022 (806) (419) Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 24, 2016 5.336,166 $ 31.251 S 96,364 $ 614 5 Net Income 48,351 Other comprehensive income Closs) (784) Dividends and dividend equivalents declared (12.803) Repurchase of common stock (246,496) (33,001) Share-based compensation 400 Common stock issued, set of shares withheld for employee taxes 36,531 (913) (581) Tax benefit from equity awards, including transfer pricing adjustments Balances as of September 30, 2017 5.126,201 35,8675 98,110 S (150) S See accompanying Notes to Consolidated Financial Statements 119,355 45,687 979 (12.188) (29,000) 4.262 (1,225) 379 179 128349 151 (784) (1201) (33.001) 1909 (1494) 114047 . September 26, 2015 $ 13,844 20.484 53,394 11,257 3,586 1,382 385 (51) (5,318) CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Years ended September 30, 2017 September 24, 2016 Cash and cash equivalents, beginning of the year 21,120 Operating activities: Net income 48,351 45,687 Adjustments to reconcile net income to cash generated by operating activities Depreciation and amortization 10,157 10,505 Share-based compensation expense 4,840 4,210 Deferred income tax expense 5.966 4,938 Other (166) 486 Changes in operating assets and liabilities: Accounts receivable, net (2,093) Inventories (2,723) 217 Vendor non-trade receivables Other current and non-current assets 1,055 Accounts payable 9.618 1,837 Deferred revenue (626) (1,554) Other current and non-current liabilities (154) (2,033) Cash generated by operating activities 63.598 65,824 Investing activities: Purchases of marketable securities (159.486) (142,428) Proceeds from maturities of marketable securities 31.775 21.258 Proceeds from sales of marketable securities 94,564 90,536 Payments made in connection with business acquisitions, net (329) (297) Payments for acquisition of property, plant and equipment (12.451) (12.734) Payments for acquisition of intangible assets (814) Payments for strategic investments, net (395) (1.388) (110) Cash used in investing activities (46.446) (45.977) Financing activities Proceeds from issuance of common stock 555 495 Excess tax benefit from equitywords 407 Payments for taxes related to net share settlement of equity awards (1.874) (1.570) Payments for dividends and dividend equivalents (12.769) (12.150) Repurchases of common stock (32.900) (29,722) Proceeds from sunce of term debt, net 28.662 24.954 Repayments of term debt (3.500) (2.500) Change in commerciales (397) Cashed in financing activities (17.17) (20.483) Increase (decrease in cash and cash equivalente (195) Cash and cash equivalents, end of the year 20,289 S 20-184 S 417 (238) (3.735) (283) 5.001 1,042 9,058 81.266 (166,402) 14,538 107.447 (343) (11.247) 220 26 (56.274) 749 (1.499) (11.561 27.114 2,191 (17,716) 7,276 21.120

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