Question

2017 $ 229, 234 114,048 61,344 $ 48,351 2016 $ 215, 639 131,376 60,024 $ 45,687 (Amounts Expressed in Millions) For the Fiscal Years Ended September 30 and September 24, respectively: Net sales Costs of sales Operating income Net income At Year End: Assets Current assets: Cash and cash equivalents Short-term marketable securities Accounts receivable, less allowance of $58 and $53, respectively Inventories Vendor nontrade receivables Other current assets Total current assets Long-term marketable securities Property, plant, and equipment, net Goodwill Acquired intangible assets, net Other assets Total assets Liabilities and Shareholders' Equity Current liabilities: Accounts payable Accrued expenses Deferred revenue Commercial paper Current portion of long-term debt Total current liabilities Deferred revenue-noncurrent Long-term debt Other noncurrent liabilities Total liabilities Shareholders' Equity: Common stock and additional paid-in capital, $0.00001 par value, 12,600,000 shares authorized; 5,126,201 and 5,336,166 shares issued and outstanding, respectively Retained earnings Accumulated other comprehensive income (loss) Total shareholders' equity Total liabilities and shareholders' equity $ 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 $ 49,049 25,744 7,548 11,977 6,496 100, 814 2,836 97,207 40, 415 241, 272 $ 37,294 22,027 8,080 8,105 3,500 79,006 2,930 75,427 36,074 193,437 35,867 98,330 (150) 134,047 $ 375,319 31, 251 96,364 634 128, 249 $ 321,686 At September 26, 2015, total assets were $290,345 and total shareholders' equity was $119,355. Required: a. Calculate Apple Inc.'s working capital, current ratio, and acid-test ratio at September 30, 2017, and September 24, 2016. b. Calculate Apple's ROE for the years ended September 30, 2017, and September 24, 2016. c. Calculate Apple's ROI, showing margin and turnover, for the years ended September 30, 2017, and September 24, 2016.

Answer 1

Ans. A 1	Working capital =     Total current assets - Total current liabilities
	2017	$128,645 - $100,814	$27,831	million
	2016	$106,869 - $79,006	$27,863	million
Ans. A 2	Current ratio   =   Total current assets / Total current liabilities
	2017	$128,645 / $100,814	1.3 : 1
	2016	$106,869 / $79,006	1.4 : 1
Ans. A 3	We assumed that inventories, other current assets and vendor non trade receivables are non liquid assets.
	Quick ratio   =   (Cash & cash equivalents + Short term Marketable securities + Accounts receivables) / Total current liabilities
	2017	($20,289 + $53,892 + $17,874) / $100,814	0.9 : 1
	2016	($20,284 + $46,671 + $15,754) / $79,006	1.0 : 1
Ans. B	Return on Common stockholder's equity =   Net income / Average Common stockholder's equity * 100
	2018	$48,351 / $131,148 * 100	36.9%
	2017	$45,687 / $123,802 * 100	36.9%
	* Average Stockholder's equity =   (Beginning equity + Ending equity) / 2
	2018	($128,249 + $134,047) / 2	$131,148
	2017	($119,355 + $128,249) / 2	$123,802
Ans. C 1	Return on investment (ROI) =   Net income / Average assets * 100
	2017	$48,351 / $348,502.50 * 100	13.9%
	2016	$45,687 / $306,015.50 * 100	14.9%
	*Average assets = (Beginning assets + Ending assets) / 2
	2017	($321,686 + $375,319) / 2	$348,502.50
	2016	($290,345 + $321,686) / 2	$306,015.50
Ans. C 2	Margin = Net income / Net sales * 100
	2017	$48,351 / $229,234 * 100	21.1%
	2016	$45,687 / $215,639 * 100	21.2%
Ans. C 3	Total assets turnover = Sales / Average assets
	2017	$229,234 / $348,502.50	0.66	times
	2016	$215,639 / $306,015.50	0.70	times