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Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 29, September 28, 2019 September 30, 2017 2018 $ $ Net sales: Products Services Total net sales 213,883 46,291 260.174 225,847 39.748 265,595 196,534 32.700 229,234 Cost of sales: Products Services Total cost of sales Gross margin 144.996 16,786 161,782 98,392 148,164 15,592 163.756 101,839 126,337 14,711 141,048 88,186 Operating expenses: Research and development Selling, general and administrative Total operating expenses 16.217 18.245 34.462 14.236 16,705 30,941 11,581 15,261 26,842 63,930 1,807 65.737 Operating Income Other Income/(expense), net Income before provision for income taxes Provision for Income taxes Net income 10484 (1807) 8674 70,898 2,005 72,903 13,372 59,531 61,344 2,745 84,089 15,738 48,351 10,481 55,256 $ Earnings per share: Basic 11.97 $ $ $ 12.01 11.91 $ $ 9.27 9.21 11.89 $ Diluted Shares used in computing eamings per share: Basic Diluted 4,617,834 4,648,913 4,955,377 5,000,109 5,217.242 5,251,692 See accompanying Notes to Consolidated Financial Statements. Apple Inc. I 2019 Form 10-K 129 d W Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 28, 2019 September 29, 2018 ASSETS: $ $ Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assets Total current assets 48,844 51,713 22,926 4,106 22,878 12,352 25,913 40,388 23,186 3,956 25,809 12,087 162,819 131,339 Non-current assets: Marketable securities Property, plant and pment net Other non-current assets Total non-current assets Total assets 105,341 37,378 32,978 175,697 338,516 170,799 41,304 22.283 234,386 365,725 $ LIABILITIES AND SHAREHOLDERS' EQUITY: $ $ Current liabilities: Accounts payable Other current liabilities Deferred revenue Commercial paper Term debt Total current liabilities 46,236 37.720 5,522 5,980 10,260 105,718 55,888 33,327 5,966 11,964 8,784 115,929 Non-current liabilities: Term debt Other non-current liabilities Total non-current liabilities Total liabilities 91,807 50,503 142,310 248,028 93,735 48,914 142,649 258,578 Commitments and contingencies W Commitments and contingencies ho Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized: 4,443,236 and 4,754,986 shares issued and outstanding, respectively Retained eamings Accumulated other comprehensive income/loss) Total shareholders' equity Total liabilities and shareholders' equity 45,174 45,898 (584) 90,488 338,516 40,201 70,400 (3,454) 107,147 365,725 $ See accompanying Notes to Consolidated Financial Statements. Apple Inc. 2019 Form 10-K131 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) September 28, 2019 25,913 Yoans ondod September 29, 2018 20,289 September 30, 2017 20,484 $ $ Cash, cash equivalents and restricted cash, beginning balances 55,256 59,531 48,351 10,903 10,157 4,840 12,547 6,068 (340) (652) 5,340 (32,590) (444) 5,906 (166) 245 (289) 2,931 Operating activities: Net income Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization Share-based compensation expense Deferred income tax expense/benefit) Other Changes in operating assets and liabilities: Accounts receivable, net Inventories Vendor non-trade receivables Other current and non-current assets Accounts payable Deferred revenue Other current and non-current liabilities Cash generated by operating activities Investing activities: Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments for acquisition of property, plant and equipment Payments made in connection with business acquisitions, net Purchases of non-marketable securities Proceeds from non-marketable securities Other (5,322) 828 (8,010) (423) 9,175 (3) 38.449 77,434 (2,093) (2.723) (4,254) (5,318) 8.966 873 (1.023) (625) (4.700) 69,391 (593) 1,092 64,225 (39,630) 40.102 56,988 (10,495) (624) (1,001) 1,634 (71,356) 55,881 47,838 (13,313) (721) (1,871) 353 (745) 16,066 (159,486) 31.775 94,564 (12,451) (329) (521) 126 (124) (46,448) (1,078) 45,896 781 Cash generated by/(used in) Investing activities Financing activities: Proceeds from issuance of common stock Payments for taxes related to not share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from issuance of term debt, net Rangumante oftar dant (2,817) (14,119) (66,897) 6,983 669 (2,527) (13,712) (72,738) 6,969 555 (1,874) (12,769) (32,900) 28,662 17.434 (71,356) 55,881 47,838 (13,313) (721) (1.871) 353 (745) 16,066 (159.486) 31,775 94,564 (12,451) (329) (521) 126 (124) (46,446) 669 Cash generated by operating activities 69,391 Investing activities: Purchases of marketable securities (39,630) Proceeds from maturities of marketable securities 40,102 Proceeds from sales of marketable securities 56,988 Payments for acquisition of property, plant and equipment (10,495) Payments made in connection with business acquisitions, net (624) Purchases of non-marketable securities (1,001) Proceeds from non-marketable securities 1,634 Other (1,078) Cash generated by/(used in) investing activities 45,896 Financing activities: Proceeds from issuance of common stock 781 Payments for taxes related to net share settlement of equity awards (2,817) Payments for dividends and dividend equivalents (14.119) Repurchases of common stock (68,897) Proceeds from issuance of term debt, net 6,983 Repayments of term debt (8,805) Proceeds from/(Repayments of commercial paper, net (5,977) Other (105) Cash used in financing activities (90,978) Increase/(Decrease) in cash, cash equivalents and restricted cash 24,311 Cash, cash equivalents and restricted cash, ending balances $ 50,224 $ Supplemental cash flow disclosure: Cash paid for income taxes, net $ 15,263 $ Cash paid for interest S 3,4235 See accompanying Notes to Consolidated Financial Statements. (2,527) (13,712) (72,738) 6,969 (6,500) (37) 555 (1,874) (12,769) (32,900) 28,662 (3,500) 3,852 (87,876) 5,624 25,913 (17,974) (195) 20.289 $ 10.417 $ 11,591 3,022 $ 2,092 Apple Inc. 2019 Form 10-K/33 QUESTION 1 Using Apple's financial statements included in this folder, match the financial ratio below with the correct calculation for Apple. Hint: Review the Chapter 3 and Chapter 4 powerpoints to find the financial ratio formulas. Return on Assets a. 62.2% Return on Equity b.16.6% Return on Sales C. 2.74: 1.00 d. 21.6% C. Debt to Assets Apple Inc. CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except number of shares which are reflected in thousands and per share amounts) Years ended September 29, September 28, 2019 September 30, 2017 2018 $ $ Net sales: Products Services Total net sales 213,883 46,291 260.174 225,847 39.748 265,595 196,534 32.700 229,234 Cost of sales: Products Services Total cost of sales Gross margin 144.996 16,786 161,782 98,392 148,164 15,592 163.756 101,839 126,337 14,711 141,048 88,186 Operating expenses: Research and development Selling, general and administrative Total operating expenses 16.217 18.245 34.462 14.236 16,705 30,941 11,581 15,261 26,842 63,930 1,807 65.737 Operating Income Other Income/(expense), net Income before provision for income taxes Provision for Income taxes Net income 10484 (1807) 8674 70,898 2,005 72,903 13,372 59,531 61,344 2,745 84,089 15,738 48,351 10,481 55,256 $ Earnings per share: Basic 11.97 $ $ $ 12.01 11.91 $ $ 9.27 9.21 11.89 $ Diluted Shares used in computing eamings per share: Basic Diluted 4,617,834 4,648,913 4,955,377 5,000,109 5,217.242 5,251,692 See accompanying Notes to Consolidated Financial Statements. Apple Inc. I 2019 Form 10-K 129 d W Apple Inc. CONSOLIDATED BALANCE SHEETS (In millions, except number of shares which are reflected in thousands and par value) September 28, 2019 September 29, 2018 ASSETS: $ $ Current assets: Cash and cash equivalents Marketable securities Accounts receivable, net Inventories Vendor non-trade receivables Other current assets Total current assets 48,844 51,713 22,926 4,106 22,878 12,352 25,913 40,388 23,186 3,956 25,809 12,087 162,819 131,339 Non-current assets: Marketable securities Property, plant and pment net Other non-current assets Total non-current assets Total assets 105,341 37,378 32,978 175,697 338,516 170,799 41,304 22.283 234,386 365,725 $ LIABILITIES AND SHAREHOLDERS' EQUITY: $ $ Current liabilities: Accounts payable Other current liabilities Deferred revenue Commercial paper Term debt Total current liabilities 46,236 37.720 5,522 5,980 10,260 105,718 55,888 33,327 5,966 11,964 8,784 115,929 Non-current liabilities: Term debt Other non-current liabilities Total non-current liabilities Total liabilities 91,807 50,503 142,310 248,028 93,735 48,914 142,649 258,578 Commitments and contingencies W Commitments and contingencies ho Shareholders' equity: Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized: 4,443,236 and 4,754,986 shares issued and outstanding, respectively Retained eamings Accumulated other comprehensive income/loss) Total shareholders' equity Total liabilities and shareholders' equity 45,174 45,898 (584) 90,488 338,516 40,201 70,400 (3,454) 107,147 365,725 $ See accompanying Notes to Consolidated Financial Statements. Apple Inc. 2019 Form 10-K131 Apple Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) September 28, 2019 25,913 Yoans ondod September 29, 2018 20,289 September 30, 2017 20,484 $ $ Cash, cash equivalents and restricted cash, beginning balances 55,256 59,531 48,351 10,903 10,157 4,840 12,547 6,068 (340) (652) 5,340 (32,590) (444) 5,906 (166) 245 (289) 2,931 Operating activities: Net income Adjustments to reconcile net income to cash generated by operating activities: Depreciation and amortization Share-based compensation expense Deferred income tax expense/benefit) Other Changes in operating assets and liabilities: Accounts receivable, net Inventories Vendor non-trade receivables Other current and non-current assets Accounts payable Deferred revenue Other current and non-current liabilities Cash generated by operating activities Investing activities: Purchases of marketable securities Proceeds from maturities of marketable securities Proceeds from sales of marketable securities Payments for acquisition of property, plant and equipment Payments made in connection with business acquisitions, net Purchases of non-marketable securities Proceeds from non-marketable securities Other (5,322) 828 (8,010) (423) 9,175 (3) 38.449 77,434 (2,093) (2.723) (4,254) (5,318) 8.966 873 (1.023) (625) (4.700) 69,391 (593) 1,092 64,225 (39,630) 40.102 56,988 (10,495) (624) (1,001) 1,634 (71,356) 55,881 47,838 (13,313) (721) (1,871) 353 (745) 16,066 (159,486) 31.775 94,564 (12,451) (329) (521) 126 (124) (46,448) (1,078) 45,896 781 Cash generated by/(used in) Investing activities Financing activities: Proceeds from issuance of common stock Payments for taxes related to not share settlement of equity awards Payments for dividends and dividend equivalents Repurchases of common stock Proceeds from issuance of term debt, net Rangumante oftar dant (2,817) (14,119) (66,897) 6,983 669 (2,527) (13,712) (72,738) 6,969 555 (1,874) (12,769) (32,900) 28,662 17.434 (71,356) 55,881 47,838 (13,313) (721) (1.871) 353 (745) 16,066 (159.486) 31,775 94,564 (12,451) (329) (521) 126 (124) (46,446) 669 Cash generated by operating activities 69,391 Investing activities: Purchases of marketable securities (39,630) Proceeds from maturities of marketable securities 40,102 Proceeds from sales of marketable securities 56,988 Payments for acquisition of property, plant and equipment (10,495) Payments made in connection with business acquisitions, net (624) Purchases of non-marketable securities (1,001) Proceeds from non-marketable securities 1,634 Other (1,078) Cash generated by/(used in) investing activities 45,896 Financing activities: Proceeds from issuance of common stock 781 Payments for taxes related to net share settlement of equity awards (2,817) Payments for dividends and dividend equivalents (14.119) Repurchases of common stock (68,897) Proceeds from issuance of term debt, net 6,983 Repayments of term debt (8,805) Proceeds from/(Repayments of commercial paper, net (5,977) Other (105) Cash used in financing activities (90,978) Increase/(Decrease) in cash, cash equivalents and restricted cash 24,311 Cash, cash equivalents and restricted cash, ending balances $ 50,224 $ Supplemental cash flow disclosure: Cash paid for income taxes, net $ 15,263 $ Cash paid for interest S 3,4235 See accompanying Notes to Consolidated Financial Statements. (2,527) (13,712) (72,738) 6,969 (6,500) (37) 555 (1,874) (12,769) (32,900) 28,662 (3,500) 3,852 (87,876) 5,624 25,913 (17,974) (195) 20.289 $ 10.417 $ 11,591 3,022 $ 2,092 Apple Inc. 2019 Form 10-K/33 QUESTION 1 Using Apple's financial statements included in this folder, match the financial ratio below with the correct calculation for Apple. Hint: Review the Chapter 3 and Chapter 4 powerpoints to find the financial ratio formulas. Return on Assets a. 62.2% Return on Equity b.16.6% Return on Sales C. 2.74: 1.00 d. 21.6% C. Debt to Assets